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Related Experiment Videos

Experience of a medicines reference-pricing model.

A D Rothberg1, J Blignault, C B Serfontein

  • 1Medscheme Integrated Care Division, Medscheme (Pty) Ltd., PO Box 70344, Bryanston, Johannesburg.

South African Medical Journal = Suid-Afrikaanse Tydskrif Vir Geneeskunde
|April 22, 2004
PubMed
Summary

A medicines reference-pricing program significantly reduced medicine inflation by encouraging generic drug use. This supplier-directed strategy proved effective in lowering healthcare expenditure for medical schemes.

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Area of Science:

  • Health Economics
  • Pharmaceutical Policy
  • Managed Care

Background:

  • Managed Care organizations often focus on member and provider strategies to control costs.
  • Supplier-directed strategies, particularly within the pharmaceutical industry, have received less attention for cost containment.

Purpose of the Study:

  • To evaluate the impact of a medicines reference-pricing program on healthcare expenditure.
  • To assess the effectiveness of a supplier-focused approach to reducing medicine costs.

Main Methods:

  • Implementation and continuous monitoring of a Medscheme Price List (MPL) by clinicians and pharmacists.
  • Prospective and retrospective analysis of medicine prices covered by the MPL.
  • Measurement of the program's effect on medical scheme expenditure.

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Main Results:

  • The reference-pricing program led to an immediate reduction in medicine inflation.
  • Observed switching from original or branded products to generic medicines.
  • Observed switching from higher-priced to lower-priced generic equivalents.

Conclusions:

  • Supplier-directed strategies, like reference pricing, are effective in managing pharmaceutical expenditure.
  • This approach can substantially reduce overall medicine costs for medical schemes.
  • The study highlights the merit of targeting suppliers to control healthcare spending.