UPTAKE AND DIFFUSION OF PHARMACEUTICAL INNOVATIONS IN HEALTH SYSTEMS - Innovation in the Biopharmaceutical Industry - page 91

After RP was first introduced in Germany in 1989, the total number of pre-
scriptions initially declined and the market share of generic medicines increased.
Expenditure on pharmaceuticals declined due to the changed prescribing behaviour
of doctors, lower prices and increased patient charges (Lopez-Casasnovas and Puig-
Junoy, 2000). But after this initial decline expenditures began to rise, mainly because
of limited impact on prescribing volumes (Giuliani et al. , 1998). This pattern con-
tinues in Germany today.
In the Netherlands, RP led to an initial price reduction of branded medicines,
but the creation of a guaranteed reimbursement ceiling resulted in generic drug pro-
ducers increasing their prices to the guaranteed level. Although the market share of
generics increased in the 1990s, total savings for the health service were much lower
than expected (Koopmanschap and Rutten, 2003). Within one year of introducing
RP in Sweden savings were achieved as the average price of drugs affected by the
policy declined by 19% and their market share fell 3% (Ljungkvist et al. , 1997).
However, the entry of new drugs to the market was significantly deterred. This led to
higher prices which counterbalanced cost savings achieved (Lundkvist, 2002), and
as a result both Norway and Sweden abandoned it (Mrazek and Mossialos, 2004).
In Italy, RP resulted in average decline of 7% in prices (Fattore and Jommi,
1998) and estimated annual savings of 1.6% in total drug expenditures (Rocchi
et al. , 2004). Adoption of the RP scheme into Andalusia, Spain, failed to achieve
the expected consumer price competition (Puig-Junoy, 2004), and savings were
less than those realised by other cost-containment policies, such as wholesale- and
pharmacist-margin reductions and negative lists (Darba, 2003).
In Europe, savings resulting from RP have fallen far short of the levels expected
and this has prompted many European countries to introduce additional cost-
containment measures (Dickson and Redwood, 1998).
In 1995, the Canadian province of British Columbia introduced RP for five ther-
apeutic classes of drugs. Substitutions with lower-cost alternatives led to initial cost
savings; (Hazlet and Blough, 2002; Marshall et al. , 2002; Schneeweiss et al. , 2002b,
2003; Grootendorst et al. , 2005), but the initial rapid fall in the number of prescrip-
tions was not sustained (Grootendorst et al. , 2001). RP appeared to decrease com-
pliance among low-income persons (Schneeweiss et al. , 2002b), reduced utilisation
of innovative drugs but also reduced outpatient visits by these patients (Hazlet and
Blough, 2002). When higher-cost prescriptions were replaced by lower-cost sub-
stitutes in one study the rate of physician visits increased, while no changes were
observed in the hospital utilisation patterns (Schneeweiss et al. , 2003), findings
confirmed by another study which found no significant change in health service
utilisation or outcomes (Schneeweiss et al. , 2002c). In British Columbia, cost sav-
ings resulting from RP were attributed to reduced drug utilisation and cost-shifting
to patients, rather than to actual changes in drug prices (Schneeweiss et al. , 2004).