Incentives prescribing

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 Chapter 9, lecturers V. Ortun Rubio of Pompeu Fabra University and L. Cabiedes Miragaya of the University of Oviedo address the subject of measures intended as a way of influencing prescriber decisions. The authors place special emphasis on analysing prescriber incentive policies, distinguishing between incentives of a financial nature (both coercive and non-coercive) and non-financial incentives (information, training, treatment protocols, monitoring of prescription practices, cost-effectiveness guidelines, interaction with other professionals, pressure from patients and so on). The authors advocate incentive policies based on a combination of financial and non-financial incentives. 

Thus, brands allow product differentiation, which, according to market theory and empirical evidence, results in a higher price than would be the case with perfect competition. Yet whereas patents provide rewards and incentives for those companies that assume the economic effort and the risk involved in research, brands benefit any company that has the wherewithal to develop effective marketing strategies and give doctors incentives to prescribe its products, regardless of their therapeutic value and the possible research orientation of the firm. 

The main factor on the demand side is probably lack of incentive in other words, the fact that economic responsibility plays no part in the decisions taken by prescribes and consumers of pharmaceuticals. When consumers bear the consequences of their decision to buy (the usual case in a non-subsidized market) they have an incentive to compare products benefits with their price, which is normally the main element of the cost for the consumer. When this... 

Two mid-term objectives are closely related to the principal goal of RP. The first of them has to do with encouraging price competition, as it provides an incentive for companies to bring their prices close to the reference level. This is precisely one of the reasons why the European Commission5 recommends RP. The second mid-term objective concerns incentives, as it takes into account the cost-effectiveness ratio of prescription drags by increasing the financial responsibility of patients, which in turn may influence prescriber decisions. It is important to note that, unlike in traditional co-payment, under this system the patient s share of the cost of the product is avoidable if the patient and/or doctor select a product with a price that does not exceed the reference price. 

The consumer does not usually have to pay the whole of the price of the drag prescribed by the doctor. Even in the case of a perfect agency relationship between prescriber and patient, drag consumption may not be optimal because of the existence of moral hazard. This means that the insured patient has no incentive to induce the doctor to make the effort to seek information on lower-cost treatments. Even if the doctor had complete information, because of moral hazard the patient would tend not to demand the socially optimal quantity of prescribed drags. Consequently, the patient may receive an excess of prescriptions and/or the drags prescribed may be too expensive in relation to the social optimum.17... 

To sum up, the factors that enable the supply side to fix prices above the marginal cost are (a) the imperfect agency relationship between the doctor (the agent) and the insurer (the principal) the prescriber may prefer the brand product, about which he or she has acquired knowledge and experience during the patent period (risk aversion), (b) the patient, and sometimes also the doctor, may have imperfect information on the quality of cheaper alternatives, and (c) the lack of incentives to change prescription habits (moral hazard). 

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. 

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. 

The explanatory factors of prescription that affect the prescriber and have a certain amount of importance and vulnerability (and as such are incentives) can be organized either hierarchically4 or in parallel. 

For the purpose of analysing incentives of a financial nature in a European context, it is advisable to attach more emphasis to the formula of budgets than to the various physician payment mechanisms. From our point of view, these mechanisms are taken into account indirectly as regards the impact that the articulation of budgets might have on prescriber fees (as in the German case). There are two reasons for this approach first, in most of Europe s public health systems the salary is the predominant form of payment for physicians,... 

To summarize, it should be highlighted that in general terms the issue of prescribing incentives is approached with a marked lack of consideration of such fundamental concerns as their impact on health, although this aspect is indirectly addressed by non-financial incentives and mixed formulas such as those discussed above. Financial incentives alone appear to lack effectiveness as instruments of pharmaceutical policy. Incentives aimed at prescribers should under no circumstances create a clash of interests between their fees and the quality of the care they provide for their patients, and therefore adjustment must be made in these terms. In turn, we cannot ignore that the effect of this type of mechanism on physicians behaviour will depend on, among other factors, the quality of available information on the aspects taken into consideration in their application. 

This chapter on prescriber incentives brings together various midpoints, all of them difficult to find. One of these midpoints concerns incentives (if there is one distinguishing feature of health care organizations it is the advisability of moderating the power of incentives in order to stop financial considerations from short-circuiting clinical considerations) another concerns the balance between health policy issues and industrial policy ones and a third concerns the influences exerted on prescription by the market, the state and clinical standards (the combination of financial and non-financial incentives). 

Cabiedes Miragaya, L. and V. Ortun Rubio, Prescriber incentives , (Chapter 9 of this volume. 

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