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A re-examination of the impact of reference pricing on anti-hypertensive drug plan expenditures in British Columbia

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Author Info
Paul Grootendorst
David Stewart (Brogan Inc., Ottawa, Ont., Canada)

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Abstract

Reference pricing (RP) limits drug plan reimbursement of interchangeable medicines to a reference price, which is typically equal to the price of the lowest-cost interchangeable drug; any cost above that is borne by the patient. Much of the evidence of the effects of RP comes from 'before and after' studies of the RP scheme adopted by Pharmacare, the publicly funded drug plan for seniors and others in British Columbia, Canada. We critically assess the identifying assumption inherent in the before and after design - namely, that pre-RP trends accurately predict counterfactual outcomes - in the context of estimating the impact of RP on Pharmacare's expenditure on anti-hypertensive drugs for its senior beneficiaries. We use similar data from a public plan that has not introduced RP to estimate the effects on drug expenditures of patent expiration, secular changes in prescribing patterns and various other factors common to all Canadian public drug plans that could potentially confound the before and after estimates of the effect of RP on drug plan expenditures. We find that controlling for such factors reduces estimates of drug plan savings attributable to RP of the Calcium Channel Blockers by about half. Copyright © 2006 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.1103
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Publisher Info
Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 15 (2006)
Issue (Month): 7 ()
Pages: 735-742
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Handle: RePEc:wly:hlthec:v:15:y:2006:i:7:p:735-742

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. Newey, Whitney K & West, Kenneth D, 1987. "A Simple, Positive Semi-definite, Heteroskedasticity and Autocorrelation Consistent Covariance Matrix," Econometrica, Econometric Society, vol. 55(3), pages 703-08, May. [Downloadable!] (restricted)
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  2. Paul V. Grootendorst & Lisa R. Dolovich & Anne M. Holbrook & Adrian R. Levy & Bernie J. O'Brien, 2002. "The Impact of Reference Pricing of Cardiovascular Drugs on Health Care Costs and Health Outcomes: Evidence from British Columbia--Volume I: Summary," Social and Economic Dimensions of an Aging Population Research Papers 70, McMaster University. [Downloadable!]
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  3. Lopez-Casasnovas, Guillem & Puig-Junoy, Jaume, 2000. "Review of the literature on reference pricing," Health Policy, Elsevier, vol. 54(2), pages 87-123, November. [Downloadable!] (restricted)
  4. Paul V. Grootendorst & John K. Marshall & Anne M. Holbrook & Lisa R. Dolovich & Bernie J. O'Brien & Adrian R. Levy, 2004. "The Impact of Differential Cost Sharing of Non-Steroidal Anti-Inflammatory Agents on the Use and Costs of Analgesic Drugs," Social and Economic Dimensions of an Aging Population Research Papers 115, McMaster University. [Downloadable!]
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This page was last updated on 2009-11-16.

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