Cost containment

Although carbon electrode production has been regarded as a mature business, the steady growth in demand and the need for improved electrodes has prompted ongoing development efforts in these areas (/) cost containment through raw material substitutions and process improvements (2) higher purity electrodes for those processes such as siUcon production (J) improvements in thermal shock resistance to enhance electrode performance and (4) better joining systems for prebakes. 

Electrolyte. The ideal electrolyte, ie, the fluid part of the cell, for organic synthesis would give high solubiHty to the organic, possess good conductivity, have low cost, contain easy recovery and purification, and be noncorrosive. Quaternary ammonium salts provide many of the above criteria ia aqueous systems. A coacise compilation of solveats and salts used ia electroorganic chemistry is available (40). 

Each unit cost contains all the costs involved in the installation of that unit. For motors installed costs include the starter, conduit, wire, and a proportionate share of the service panelboard and busbars. The motor cost is not included since this will be part of the equipment cost. In the case of lighting, the installed cost includes the lighting fixtures, the conduit and wire, and a proportional share of the hghting panelboard and service switching costs. 

Despite these limitations, sensitivity analyses and ongoing updated evaluations will allow the creation of interactive software programs to aid health care stakeholders and patients in making the most informed decisions about treatments amid a milieu of cost containment. 

Some of the challenges facing the industrial laboratory are limited resources, cost containment, productivity, timeliness of test results, chemical safety, spent chemicals disposal, technician capability, analytical capability, disappearing skills, and reliability of test results. The present R D climate in the chemical industry is one of downsizing at corporate level (lean and mean), erosion of boundaries between basic and applied science, and polymer science and analytical chemistry as Cinderella subjects. Difficult chemical analyses are often run by insufficiently skilled workers (a managerial issue). 

DC Cave. Incentives and cost containment in primary care physician reimbursement. Benefits Q 3 70-77, 1993. 

SD Horn, PD Sharkey, DM Tracy, CE Horn, B James, F Goodwin. Intended and unintended consequences of HMO cost-containment strategies results from the managed care outcomes project. Am J Managed Care 2 253-264, 1996. 

The value placed on efficiency and predictability, and the institutional pressures for cost-containment, accountability and measurability are enhancing the appeal of reductionist theories. They fit with the tendency to locate social problems in individual pathology. They suit the actuarial mentality that places faith in statistical information as a means to predict and minimize future risk.7 Genetic and evolutionary explanations have become a way to address the issues that trouble society - the perceived decline of the family, the problems of crime and persistent poverty, changes in the ethnic structure of the population, and the pressures on public schools. 

In the analysis of health care the price of care is often confused with the level of expenditure, particularly so in the analysis of the cost of pharmaceuticals. Pharmaceutical cost containment should never be the exclusive goal of public policies emphasis on costs without paying attention to the value of the products may lead to inefficient policies. The value of a new pharmaceutical resides in its ability to improve health, not just in its contribution to the decrease or increase of health care costs. Increased spending on health care and pharmaceuticals is therefore compatible with a reduction in their price, if the resulting value increases more than the expenditure. 

This book consists of a series of works that evaluate various aspects related to the public financing of pharmaceuticals. In all health systems with majority public funding, the financing of pharmaceuticals constitutes one of the key factors in reform policies and health cost containment measures. This importance of pharmaceutical spending can be explained by both its relative size (its share within health expenditure as a whole), and its rapid growth, which is closely related to the constant incorporation of therapeutic innovations. 

In Chapter 7, professor B. Gonzalez Lopez-Valcarcel of the University of Las Palmas de Gran Canaria analyses the participation of the insuree in the payment of the price of the pharmaceutical. In spite of the widespread application of pharmaceutical co-payment in European health systems, the author observes that this mechanism does not appear to have been very effective in cost containment. Co-payments represent a way of making the user share the burden of the cost rather than an essential source of income for the public system. Theory and comparative experience of the system alike indicate that the indiscriminate application of co-payments is a source of inequalities, and that in any event its effects on consumption depend largely on prescriber incentives. For this reason the author recommends that co-payments should not be uniform for different population groups, and that they should not be applied in isolation, as their effectiveness is enhanced in combination with other instruments. 

In all EU countries except Germany and Denmark, some form of regulation or intervention in the individual prices of medicines is used as the principal cost containment policy, ranging from systems that fix the price of each product to profit control systems (as in the UK). Price regulation... 

Mossialos, E. (1998), Pharmaceutical pricing, financing and cost containment in the European Union Member States , in R. Leidl (ed.), Health Care and its Financing in the Single European Market, Amsterdam IOS Press. 

Mossialos, E., C. Ranos and B. Abel-Smith (1994), Cost Containment, Pricing and Financing of Pharmaceuticals in the European Union the Policy-makers View, London LSE Health and Pharmetrica... 

Since 1990, responsibility for containing the public pharmaceutical bill in Spain has fallen to a variety of instruments, none of which has proved particularly effective at cost containment, as can be seen from Table 6.1. These instruments have included stricter control over the National Health Service (NHS) (Sistema Nacional de Salud or SNS) budget for pharmaceuticals, modifications to the co-payment rates for certain drugs for chronic diseases, the exclusion of certain drugs from public financing (negative lists) and agreements with laboratories and pharmacies.1... 

Although this measure was first introduced in Germany in 1989, constraints on public drag spending and the creation of incentives for cheaper alternatives are not new to cost containment policies, especially in public health systems. Several forms of public financing of pharmaceuticals based on comparison (yardstick competition) have been used in some countries by public and private insurers. Public financing mechanisms that pursue a similar strategy to that of RP include the maximum allowable cost (MAC) applied by the... 

The main drawback of RP is that cost containment is not always achieved, and when it is, it is fleeting. The reasons for the limited effect (small, shortterm savings) of RP on cost containment are (a) as we have seen, it is applied to a limited proportion of the market, which is generally not that which leads the growth in expenditure, (b) companies react by recovering the losses incurred on the products covered by the system through price increases in non-covered products, and (c) the system seeks to control prices yet does not influence either the increase in the number of drags prescribed or the structure of this consumption. 

Woodfield, A., J. Fountain and P. Borren (1997), Money Medicines an Economic Analysis of Reference Pricing and Related Public-sector Cost-containment Systems for Pharmaceuticals with Special Reference to New Zealand, New Zealand Merck Sharp Dome. 

In the 1970s and 1980s in the USA, the need for health cost containment and the alarming empirical estimates on the extent of moral hazard advised an increase in the co-payment rate for health services. Thus, Feldstein5 estimated that if the co-insurance rate were raised from 33 per cent to 67 per cent, the costs incurred due to welfare loss would fall much more than the benefits derived from reducing the risk. Subsequently, Feldman and Dowd,6 using data from the Rand experiment in the 1980s, reached similar conclusions. 

More recently, large databases have been used to estimate the effect of drug co-payment in the USA under different insurance schemes.10 The conclusion reached is that there is a significant interaction effect between the behaviour of demand and prescriber incentives. Thus, larger prescription drug copayments are associated with lower expenditure when the doctor does not share the financial risk of the cost of the drugs (that is, practises in an independent practice association) but this effect is barely perceived in managed care models in which the doctor has incentives for cost containment. 

However, the extensive and varied experience undergone in Europe and its trend towards greater participation by the user in the financing of pharmaceuticals does not seem to have made any substantial contribution to cost containment. Practically all European countries use drag co-payment with the imphcit objective of making the user jointly responsible for the cost, but not as an essential source of revenue for the public health care system, nor has it proved to be a political instrument with the ability to contain costs or substantially improve efficiency. 

Co-payment is an instrument that should not be used on its own. Neither efficiency in drag use nor equity nor the control of pharmaceutical expenditure can rest solely on co-payment. Its effectiveness is reinforced when it is combined with other instruments and incentives. In fact, all European countries combine, in different doses and proportions, multiple instruments that influence the behaviour of the industry, prescribes and patients. It is sufficient to recall that pharmaceutical expenditure is the product of price by quantity, and to consider the enormous international variability of drag prices,35 in order to understand the limitations of co-payment regulation in comparison with other policies that influence prices. Policies aimed at price control can be as effective as co-payment - or more so - for purposes of cost containment. 

Mossialos, E. and J. Le Grand (1999), Cost containment in the EU an overview , in E. Mossialos and J. Le Grand (eds), Health Care and Cost Containment in the European Union, Ashgate Aldershot. 

Abel-Smith, B. and E. Mossialos (1994), Cost containment and health care reform a study of the European Union , Health Policy, 28, 89-132. 

Specifically, Spain s experiences in the selective financing of pharmaceuticals up to 1997 (Order of 6 April 1993, developing Royal Decree 98/93 of 22 January 1993, which regulates the selection of medicines for purposes of financing by the National Health System, BOE No. 88, 13 April 1993, Madrid, Boletin Oficial del Estado) lead us to conclude that the effectiveness of these measures has been small as regards their cost containment objectives. The decrees on the selective financing of pharmaceuticals of 1993 and... 

In general, the results confirm the short-term nature of the pharmaceutical cost containment strategy. The trend followed by spending in the long term effectively shows a return to the initial levels prior to the measures. 

Table 10.11 Some cost-containment measures in the pharmaceutical sector... 

See also Hernandez s controversial article,36 with its strong criticism of the pharmaceutical cost containment policy adopted in Spain. 

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