title: Financing pharmaceuticals in transition economies.
abstract: This paper (a) provides a methodological taxonomy of pricing, financing, reimbursement, and cost containment methodologies for pharmaceuticals; (b) analyzes complex agency relationships and the health versus industrial policy tradeoff; (c) pinpoints financing measures to balance safety and effectiveness of medicines and their affordability by publicly funded systems in transition; and (d) highlights viable options for policy-makers for the financing of pharmaceuticals in transition. Three categories of measures and their implications for pharmaceutical policy cost containing are analyzed: supply-side measures, targeting manufacturers, proxy demand-side measures, targeting physicians and pharmacists, and demand-side measures, targeting patients. In pursuing supply side measures, we explore free pricing for pharmaceuticals, direct price controls, cost-plus and cost pricing, average pricing and international price comparisons, profit control, reference pricing, the introduction of a fourth hurdle, positive and negative lists, and other price control measures. The analysis of proxy-demand measures includes budgets for physicians, generic policies, practice guidelines, monitoring the authorizing behavior of physicians, and disease management schemes. Demand-side measures explore the effectiveness of patient co-payments, the impact of allowing products over-the-counter and health promotion programs. Global policies should operate simultaneously on the supply, the proxy demand, and the demand-side. Policy-making needs to have a continuous long-term planning. The importation of policies into transition economy may require extensive and expensive adaptation, and/or lead to sub-optimal policy outcomes.
authors.affiliation: LSE Health, London School of Economics, Houghton Street, London WC2A 2AE, England. p.g.kanavos@lse.ac.uk
authors.forename: P
authors.initials: P
authors.lastname: Kanavos
mesh_terms: D003363:Cost Control / Q000191:economics; D003365:Costs and Cost Analysis / Q000191:economics; D016527:Drug Costs / Q000331:legislation & jurisprudence / Q000592:standards; D017850:Economics, Pharmaceutical; D019456:Health Transition; D006801:Humans; D007880:Legislation, Drug / Q000191:economics