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Causes of and Potential Solutions to the High Cost of Health Care

Designing Pharmacy Benefits to Improve Quality and Contain Costs

On October 10, 2003, Sebastian Schneeweiss, M.D., Sc.D., made a presentation in a Web-Assisted Audioconference at Session 3, which was entitled Designing Pharmacy Benefits to Improve Quality and Contain Costs.

This is the text version of Dr. Schneeweiss's slide presentation. Select to access the PowerPoint® Slides (1.1 MB).

Designing Pharmacy Benefits to Improve Quality and Contain Costs

Sebastian Schneeweiss, M.D., Sc.D.
Instructor in Medicine and Epidemiology
Director for Policy Studies
Division of Pharmacoepidemiology and Pharmacoeconomics
Brigham and Women's Hospital and Harvard Medical School

Slide 1

Reference Drug Pricing in British Columbia (BC)

Bar depicting proportion of drug prices and who pays. About one third of the total drug price is paid for by out-of-pocket contribution, the rest by a drug benefits program. The reference price is what is paid for by the benefits program. There is a box that reads, "RP is not a pricing policy but a reimbursement policy."

Slide 2

Reference Pricing in BC

  • Introduction of reference pricing (RP) for ACE inhibitors and calcium channel blockers on January 1, 1997.
  • The new RP policy affects all elderly persons (65 years or older).
  • Reference pricing came with exemptions for frail elderly patients that were generously approved by Pharmacare.

Slide 3

Pharmacy savings in prevalent ACEI users

A line graph showing the average monthly anti-hypertensives ingredient expenditures per patient from April 1996 until April 1998. With the implementation of the policy at the beginning of 1997, the monthly expenditures registered a 12 month savings of 6,700,000 dollars, as compared with the projected monthly expenditures.

Source: Schneeweiss, et al. Journal of the Canadian Medical Association 2002.

Slide 4

Expenditures for additional visits in prevalent ACEI users.

Graph comparing number of physician visit days per patient comparing switchers and non-switchers of medications from January 1996 until April, 1998. Additional expenditures for visits was 700,000 dollars from the baseline in this population.

Source: Schneeweiss, et al. New England Journal of Medicine 2002.

Slide 5

Reduced time between visits in patients who switched ACE inhibitors.

Graph comparing median prescription duration in days between dispensings. The graph compares duration in recipients of cost-share drugs to no-cost drugs, and those who switched from cost-sharing to no-cost. Duration decreases at the policy implementation for no-cost and "switchers", remaining steady for the cost-sharing drugs, all values gradually return to the baseline of about 70 days.

Source: Schneeweiss, et al. Journal American Geriatric Association 2002.

Slide 6

No effect on other health services.

  • We concluded in earlier work that there is no increase in the incidence of hospital admissions or emergency room hospitalizations.
  • No effect on admissions to long-term care facilities.
  • No effect on mortality.

Source: Schneeweiss, et al. New England Journal of Medicine 2002.

Slide 7

Pharmacy savings in incident ACEI users

Graph showing 12 month savings of 200,000 dollars and a 24 month savings of 800,000 dollars in the costs of ACE inhibitors for hypertension with the start of reference drug pricing.

Slide 8

Administrative costs for prior authorization of RP drugs.

Development and implementation cost BC 239,301 dollars, and 24,789 in capital and overhead. Labor costs totaled 159,143 dollars.

Source: Schneeweiss, et al. Health Economics (submitted).

Slide 9

No price changes in high-priced ACE inhibitors related to RP.

Graph depicting the lack of change of several ACE inhibitors with the implementation of RP. No change is shown.

Slide 10

Net health care savings.

Table breaking down costs in several categories, including type of user, and administrative costs. No savings is derived from lower drug prices. Table shows a net savings of 5.8 million dollars over one year and 12.4 million dollars over two years for reference pricing.

Current as of July 2003

Internet Citation:

Designing Pharmacy Benefits to Improve Quality and Contain Costs. Slide Presentation by Sebastian Schneeweiss, at Web-Assisted Audioconference, "Causes of and Potential Solutions to the High Cost of Health Care." Agency for Healthcare Research and Quality, Rockville, MD.

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The information on this page is archived and provided for reference purposes only.

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