Economic impact of cost-containment strategies in third party programmes in the US (part I)

Abstract

The rising cost of healthcare has strained the resources of governments, private third parties and individuals with responsibility to pay for it. Various strategies have been used in an attempt to control costs. This article examines the economic impact of 4 such strategies: (a) cost sharing; (b) prescription limits; (c) rebates; and (d) cost limits. Cost sharing has been successful at reducing utilisation of prescription drugs, although the effects have not been uniform across therapeutic categories. However, the long term effect on cost and utilisation of other medical services, and the impact on overall health status, remain largely unknown. Some evidence suggests that utilisation of other services may increase. The available data regarding drug rebate programmes have been descriptive in nature. However, the designs employed in this research do not establish a direct causal relationship between rebate programmes and changes in Medicaid drug expenditure. Furthermore, still unknown is the degree of cost shifting and the effect of the rebate programme on other large public and private drug purchasers. The Maximum Allowable Cost programme led to direct savings in drug costs, but the size of these savings was variable and uncertain because of administrative costs of the programme. The Estimated Acquisition Cost programme has not resulted in significant savings.