Cost-containment strategies

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. 

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. 

Reeder, C., et al., "Economic Impact of Cost Containment Strategies in Third Party Programmes in the U.S. ( Part 1)," Pharmaeconomics, 4, 92-103 (1993). 

Traditional cost-containment measures are not always consistent with improved patient care. Thus attention has turned toward demonstrating the value of health care. A full evaluation of relevant costs and consequences differentiates outcomes research from traditional cost-containment strategies. Costs are defined as the value of the resources consumed by a program or treatment alternative. Consequences are defined as the effects, outputs, and outcomes of the program or treatment alternative (Eisenberg, 1989). 

In response to rapidly increasing health care costs, private insurance companies and employers (who pay the premiums in whole or in part for their employees) have increased their part in implementing cost-containment strategies. A dramatic effort has been the application of business principles to purchasing and vendor selection and payment for and selection of health care providers and institutions of care. 

Because of cost-containment strategies of both the private and governmental sectors, hospital utilization has declined. This has resulted in a decline in the number of patient beds, the average length of stay, and patient bed census. The present predominant view is that hospitalization of any patient, regardless of revenue source, is to be avoided wherever possible. Only those patients for whom hospitalization can be fully justified are admitted. 

To more fully understand the impact of managed care on the pharmaceutical industry, a look at managed care s cost-containment strategies and continued movement toward multiple payers will be presented first, followed by the influential market dynamics of increased competition and changing demographics. Concluding the section will be a discussion of how these factors have impacted the pharmaceutical industry s research and development priorities and product life cycles. 

In addition to the influence of a growing geriatric market segment on pharmaceutical industry research and development, each of the other managed care and market influences -cost-containment strategies, multiple payers and market competition - have collectively impacted pharmaceutical research and development. The pharmaceutical industry is highly... 

As pharmaceutical cost containment strategies touch upon the interests of many groups (industry, wholesalers, retailers, consumers, doctors, etc.), reactions sometimes amounting to forceful opposition are to be expected when such policies are proposed or implemented. Sometimes these reactions are based on misunderstandings which need to be countered with sound information. Fears as to the failure or possible adverse effects of a cost containment programme can for example often be allayed if it can be shown that similar measures have been successfully implemented, without doing harm, earlier in another country in a situation similar to one s own. 

In addition to cost-containment strategies, managed care is impacting the pharmaceutical industry through a continued movement toward multiple payers of healthcare. The make-up of the payer... 

Cost Containment Strategies - Pharmacoeconomics and Comparator Assessment... 

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