Flora M. Haaijer-Ruskamp
1. Alternative co-payment systems
Pharmaceutical policies generally provide for patients to pay a part of the costs of the drugs which they receive. A variety of co-payment systems exist. As noted in Chapter 3, they can take the form of (1) a fixed sum per prescription; (2) a percentage of the overall cost of the prescription; (3) a combination of fixed sums and percentages; and (4) deductibles. In OECD countries the system of fixed sums is used less then the proportional system, i.e. a percentage of the prescription price. Fixed sums are payable in Australia, Austria, Germany, Japan, New Zealand and the UK, while percentage charges apply in Belgium, Canada, Denmark, France, Greece, Hungary, Ireland, Korea, Luxembourg, Norway, Portugal, Spain, Sweden, Switzerland, Turkey and under private insurance schemes in the USA. Belgium and Italy employ mixed systems. The proportion of co-payment required varies in some countries with the therapeutic value of the drug. In many low and middle-income countries co-payment has been introduced since the 1980’s as an element in cost recovery schemes or revolving funds in which patients are asked user fees (see Chapter 15).
2. Effects on prescription volume
The effects of co-payments on the volume of prescribing depend on the process by which patients weigh up the costs involved against the risk or inconvenience of doing without the drug. Many studies have therefore looked at this so-called question of “price elasticity” of drugs. Most of the studies carried out in the ’eighties agreed that the demand for prescription drugs and even, to a lesser degree, the demand for over-the-counter (OTC) products is reduced as the direct contribution to costs required from the patient rises, though they may disagree about the extent of this influence [2,4]. Much less agreement exists on whatever differences there may be between short-term and long-term effects.
The level of the co-payment is, as one would expect, relevant for its impact. If it is low it will have no effect. In The Netherlands, a co-payment of 20% with a ceiling of ƒ200/(€91) per year was too low to affect prescription levels, and any possible savings were offset by the high administrative costs involved [3]. Excessively high co-payment levels, on the other hand, may lead to undesirable effects, such as a decrease in the use of essential drugs. In the USA it was shown that a cap on the number of prescriptions reimbursed clearly resulted in lowered drug use. However, if the patient had to pay too much, the use of essential drugs decreased, together with that of non-essential drugs, resulting in an increase in other health related costs [8]. In the Australian system such effects did not occur after the introduction of a
0924-6479/02/$8.002002 – World Health Organization. All rights reserved
flat fee (with exemptions for the needy); the reduction appeared to be primarily related to ‘discretionary drugs’, and not to essential drugs [6].
The impact of co-payments differs between different groups of patients; health status and ability to pay are particularly relevant. For example, with the implementation of full coverage a greater increase in drug use was seen in patients with a lower health status, suggesting that the co-payments had acted as a deterrent [1]. The low-income elderly are less likely to use medication for a given health problem than are elderly patients in the top income groups [10]. These studies show how important it is for public schemes involving co-payments to provide protection for the vulnerable groups (elderly, chronically ill and low-income groups), a consideration which means that in many countries such groups enjoy exemption from payment. In fact, this indicates the inherent tension between the objectives of co-payment schemes as a cost containment policy and social policies regarding access to pharmaceuticals. In any scheme capable of having a reasonable impact on pharmaceutical expenditure, the less privileged groups of the population can be adversely affected. It is precisely these groups that society will want to protect from the (undesirable) effects of co-payments on moral grounds.
Doctors and patients will try to minimize the cost burden. The lessons learned in the eighties were that as a result of co-payment systems prescribing may shift from cheaper drugs with a high co-payment to more expensive drugs with a lower co-payment (for example, from paracetamol to diclofenac). In addition, shifts to larger amounts per prescription were observed, as a means of reducing the effect of flat fee co-payments [9]. Both mechanisms thus led to higher public expenditure instead of producing the intended savings.
3. Effect of particular co-payment systems on the cost burden
Given the variety of schemes it is not possible to provide any generally applicable conclusions as regards the impact of different forms on the burden of costs borne by the patient. In a study assessing the cost burden in a sample of European countries using typical prescription scenarios, the delicate interplay between drug price, co-payment system and exemptions is illustrated [7].
The economic burden on patients proves to be consistently lower in some countries then in others.
France, Italy and Germany had lower costs to the patient, while in Austria, UK, Denmark and Finland they were generally higher. However, the underlying reasons differ. In a system using proportional co-payments, low drug prices translate into low costs to the patient, as for example in France and Italy. In Germany, the only country with a fixed fee system and relatively low costs to the patient, the reason was the generally lower level of the fee on individual items. The Netherlands goes a step further in using a reference price system and not requiring co-payments at all. Patient costs incurred in alternative drug treatment regimens are likely to be similar or identical in fixed charge systems whereas in proportional systems the cost burden for the patient can differ from one regimen to another since the contribution varies with the drug price. Beyond this, any link between cost burden and therapeutic need is tenuous, and is not recognized by patients in comparable clinical circumstances
4. Exemptions and reinsurance
Countries in the industrialized world have implemented specific safety nets to counter the negative ef-fects of co-payments. As a result, in the UK almost 50% of the population is exempt from co-payments.
Table 1
Reinsurance in OECD countries
Country Reinsurance allowed? Does reinsurance offset co-payment?
Australia Private, mainly for hospital Not usually
Belgium In hospital only by non-profit insurance, profit insurance is allowed
N/a
Canada Yes N/a
Czech rep Yes N/a
Denmark Yes In some cases
Finland Yes Yes
France Yes Yes
Greece Yes No
Hungary Yes N/a
Luxembourg Yes N/a
Mexico Yes Yes
Netherlands Yes N/a
New Zealand Yes No
Norway Yes N/a
Sweden Yes Yes
US Yes N/a
Austria No Nr
Germany No Nr
Japan No Nr
Spain No Nr
Switzerland No Nr
Ireland N/a N/a
Italy N/a N/a
Turkey Unknown Nr
United Kingdom Unknown N/a
N/a: not available; nr: not relevant. Source: [5].
In France, despite co-payment for drugs, prescription drugs are virtually free for the 80% of the popula-tion who enjoyed supplemental insurance in 1990. The supplemental private companies or co-operatives reimburse most or all of the co-payments. The recent law on universal health insurance coverage will extend this supplemental insurance to 100% of the population [5]. Such exemptions, and reinsurance op-tions for the population, offset the effect of co-payment in reducing the use of drugs that are not needed, or too expensive. Of OECD countries only Austria, Germany, Japan, Spain and Switzerland have offi-cially excluded such a cost shifting by reinsurance in second-tier payment systems (Table 1).
5. Conclusions
Co-payments can be effective as a cost containment measure. There is no evidence that one method is more effective in reducing public pharmaceutical expenditure than another. The advantage of the propor-tional system is that the costs to the patient are directly related to the duration of treatment; this prevents individuals from partly evading charges by arranging to receive prescriptions for a large quantity of a drug at once. When a system involving a fixed fee per prescription is employed, evasion is much easier, and special measures are called for to counter it.
The disadvantage of any co-payment system is that it may act as a deterrent for essential care and run counter to the social objectives of a health care system. This is the advantage of a reference price system in which the emphasis is on the use of low-priced drugs and in which co-payments can therefore be avoided.
References
[1] P.V. Grootenhorst, A comparison of alternative models of prescription drug utilization,Health Economics4(1995), 183–
198.
[2] J. Hurley and N.A. Johnson, The effects of co-payments within drug reimbursement programs,Canadian Public Policy 17(1991), 473–489.
[3] J.B.F. Hutten, C.C. Ros and D.M.J. Delnoij, Effecten van de Algemene Eigen-Bijdrageregeling (Effects of General Patient Charges), Eindrapport, NIVEL, Utrecht, 1998.
[4] C. Huttin, The use of prescription charges,Health Policy27(1994), 53–73.
[5] S. Jacobzone, How can pharmaceutical policy reconcile social objectives and industrial efficiency? A view from the recent experiences of OECD countries, OECD, 2000.
[6] P. McManus, N. Donelly, D. Henry et al., Prescription drug utilization following patient co-payment changes in Australia, Pharmacoepidemiology and Drug Safety5(1996), 385–392.
[7] P. Noyce, C. Huttin, V. Atella, G. Brenner, F.M. Haaijer-Ruskamp, M. Hedvall and R. Mechtler, The cost of prescription medicines to patients,Health Policy52(2000), 129–145.
[8] S.B. Soumerai, J. Avorn, D. Ross-Degnan and S. Gortmaker, Payment restrictions for drugs under Medicaid: Effects on therapy, cost and equity,New Engl. J. Med.317(1987), 550–556.
[9] B. Starmans, R. Janssen, M. Schepers et al., The effect of patient charge and a prescription regulation on the use of antihypertension drugs in Limburg, The Netherlands,Health Policy26(1994), 191–206.
[10] B. Stuart and J. Grana, Ability to pay and the decision to medicate,Medical Care36(2) (1998), 202–211.
IOS Press