UPTAKE AND DIFFUSION OF PHARMACEUTICAL INNOVATIONS IN HEALTH SYSTEMS - Innovation in the Biopharmaceutical Industry - page 94

1999; Danzon and Pauly, 2002; Berndt, 2005). In contrast, lack of insurance cov-
erage restricts access to essential treatment (Blustein, 2000), reduces utilisation of
prescription drugs (Cunningham, 2002), and hinders uptake and diffusion of inno-
vations. This is true even where there is demonstrable need and physician awareness
of the benefits of the innovative drug (Griffiths et al. , 1994). Compared to estab-
lished participants, new enrolees in an insurance plan utilise more pharmaceuticals,
particularly expensive and innovative ones (Stuart et al. , 1991; Stuart and Coulson,
1993; Gianfrancesco et al. ,1994). Medicare enrolees having private prescription
drug coverage tend to use newer innovative medicines, compared with enrolees
who have no such coverage (Seddon et al. , 2001; Lichtenberg, 2002).
Cost sharing
Cost sharing adversely influences the aggregate demand for prescriptions and util-
isation of medicines (Layers, 1989; Harris et al. , 1990; Hurley, 1991; Ryan and
Birch, 1991; Dustan et al. , 1992; Huttin, 1994; Gerdtham, 1996; Johnson et al. ,
1997; Adams, 2001). It also leads to a decline in the utilisation of essential drugs
(Stuart, 1998; Fortess et al. , 2001; Schneeweiss et al. , 2002a), reduces compliance
(Dor, 2004), and increases adverse health events (Tamblyn et al. , 2001), particularly
for poor patients and those with chronic illnesses (Lexchin and Grootendorst, 2004;
Stuart and Zacker, 1999). With cost sharing, the decline in utilisation of medicines
essential for serious medical conditions is small, as long as out-of-pocket spending
is not large (Pilote et al. , 2002) and patients' sensitivity to such charges is low (Car-
rin and Hanvoravongchai, 2003). However, it is unclear from these studies whether
cost-sharing has a differential effect on innovative and established drugs.
Drug budgets and prescribing limits
In general, drug budgets adversely affect the uptake and diffusion of innovative
medicines by encouraging the use of generic low-cost (rather than cost-effective)
drugs (Bradlow and Coulter, 1993; Maxwell et al. , 1993; Von der Schulenburg,
1994) and delaying the introduction of new innovative drugs (Le Pen, 2003). Health
effects of prescribing changes due to restricted drug budgets have not been ade-
quately studied, but drug budgets do not always lead to cost savings. Indeed, expe-
rience suggests that the number of prescriptions or health expenditure may actually
increase (Schoffski and Graf von der Schulenburg, 1997; Schwermann et al. , 2003),
especially if there are no incentives to prescribe efficiently and effectively (McGuire
and Litt, 2003).
Restricting or withdrawing reimbursement for drugs leads to reduced prescrib-
ing, substitution of newer drugs with older ones, and increased referral of patients to
parts of the health system where these drugs may be accessed (Huttin and Andral,