UPTAKE AND DIFFUSION OF PHARMACEUTICAL INNOVATIONS IN HEALTH SYSTEMS - Innovation in the Biopharmaceutical Industry - page 96

A major shortcoming of these studies is that none have assessed the impact of
fundholding on the quality of prescribing or on the uptake and diffusion of innovative
medicines.
Managed care in the US
Managed care (characterised by integrated financing and delivery of services, fixed
health care budgets, shift of services from hospitals to ambulatory care, rebates
from a manufacturer for inclusion and utilisation of its drugs in the formulary, and
a number of mechanisms to control health care costs) was introduced in response to
rapidly rising health care costs, and has become the dominant mode of health care
financing and delivery in the US.
The overall impact of managed care on cost and utilisation of medicines is mixed
(Hurley et al. , 1989; Schoenman et al. , 1997). But there are no empirical studies
which have explored how managed care influences the quality of prescribing relative
to innovative medicines, health outcomes and wider economic benefits. Managed
care has increased the price elasticity of on-patent medicines (Danzon, 1999). The
use these medicines by managed care organisations (MCOs) does not appear to differ
from fee-for-service plans, because new innovative medicines satisfy previously
unmet needs and are perceived to help reduce total health care costs (even at the cost
of some increase in drug expenditure) (Chernew et al. , 1997). Furthermore, contracts
between MCOs and manufacturers that incorporate discounts and rebates enable
the use of innovative medicines (Murray and Deardorff, 1998). With expanded
coverage, managed care may lead to increased use of new innovative medicines by
improving patient access (Weiner et al. , 1991), lowering out-of-pocket payments,
and enabling greater use of prescription medicines (Davis et al ., 1999).
Service Provision
Medical services cannot be viewed in isolation. Instead, they should be viewed as
a network of interrelated activities where interventions in one part of the system
result in changes in the use of other parts. Improved access to innovative medicines
generally decreases hospitalisation rates and overall health care expenditures.
Disease management
Disease management requires integrated management of chronic illnesses to
improve the efficiency, quality and effectiveness of care. This can enhance patient
safety, improve health outcomes and achieve economic benefits, provided that it
allows appropriate uptake of innovative medicines that help to reduce hospitalisa-
tions (Sclar et al. , 1994; Armstrong and Langley, 1996).