In this study we focused on elderly beneficiaries of BC Pharmacare. These people constitute the single largest beneficiary group (approximately 487 000 in 1996, accounting for 60% of Pharmacare spending), and they have the highest per capita rates of consumption of anti-anginal drugs. Although reference-based pricing has to date been applied to several drug groups other than nitrates (specifically histamine-2 receptor antagonists, nonsteroidal anti-inflammatory drugs, angiotensin-converting enzyme inhibitors and dihydropyridine CCBs), we focused on nitrates because there were no apparent concomitant changes in either the pharmacological management of angina or the Pharmacare reimbursement policy for these drugs over our study period. This stability facilitated estimation of the effects of reference-based pricing of nitrates, although the presence of time-varying confounders could have affected our results.
We estimate that reference-based pricing of nitrate drugs has reduced Pharmacare expenditures on nitrates taken by senior citizens by approximately $15 million in the first 31/2 years after introduction of the policy. This is equivalent to $4.2 million annually or approximately 2% of the $202 million that Pharmacare spent on drugs (excluding dispensing fees) for senior citizens in 1996. Reference-based pricing was also applied to social assistance recipients and members of households with high drug costs who qualify for coverage by exceeding an income-contingent deductible; their combined 1996 drug costs were $119 million. However, because most members of these groups are less than 65 years of age and probably have lower rates of nitrate use than senior citizens, reference-based pricing of nitrates probably saved a lower proportion of drug costs for these groups.
Most of Pharmacare's savings are attributable to lower reimbursement prices for sustained-release nitroglycerin tablets and the nitroglycerin patch, which is now the nitrate most widely prescribed in British Columbia. There is no evidence that the reductions in Pharmacare expenditures on nitrates were offset by higher expenditures on other anti-anginal drugs, nor did we find that the reimbursement prices of the reference standard drugs (ISDN and nitroglycerin ointment) increased after the introduction of reference-based pricing.
Rates of prescribing of the sublingual nitrates — the use of which might indicate compromised health status in people with angina — remained virtually unchanged after introduction of reference-based pricing. This finding, coupled with the fact that nitrates offer symptomatic relief only, is consistent with, although certainly not conclusive evidence of, the view that the health of elderly beneficiaries was unaffected by the policy. Indeed, our aggregated data might mask increases in sublingual nitrate use among particularly vulnerable populations. There did not appear to be widespread substitutions between nitrates and other anti-anginal drugs after introduction of reference-based pricing. Rates of prescribing of all nitrates dropped only 2% in the 14 months after introduction of the policy (to December 1996), and rates of CCB use declined by 7% in the same period. Although there was a 10% increase in rates of prescribing of β-blockers over the same period, there is some evidence that rates of prescribing of these drugs were increasing contemporaneously in jurisdictions where reference-based pricing was not in effect.9
About 8% of cumulative Pharmacare savings represent the additional costs to beneficiaries who elected to pay out of pocket to acquire the higher-priced nitrates not fully reimbursed by Pharmacare. Rates of out-of-pocket spending by senior citizens were highest immediately after the policy was implemented. It is plausible that these patients, initially unaware of the policy when refilling prescriptions for restricted nitrates and unable to contact their physicians to have their prescriptions changed, elected to pay the out-of-pocket expense but avoided paying for subsequent prescriptions by receiving a special authority exemption or by switching to a fully reimbursed nitrate.
Our finding that reference-based pricing reduced drug expenditures is consistent with a report by Narine and associates,10
who found that reference-based pricing of histamine-2 receptor antagonists in 1995 reduced Pharmacare expenditures in the following year. Evidence from studies of reference-based pricing in Europe2,3,11
indicates that such policies cannot control drug costs over the long term, but the strength of some of this evidence has been questioned.12
There is some evidence that reference-based pricing in British Columbia has reduced public drug expenditures, but the impact of the policy on other health care costs remains ambiguous for several reasons. Patients taking a drug that is no longer fully reimbursed might consult their physician about treatment options (e.g., switching to a fully reimbursed drug, applying for an exemption or paying out-of-pocket costs), which would increase the number of physician visits, as would the monitoring of patients whose medication has been switched. If a patient cannot tolerate a switch in drugs or if drugs are not interchangeable, the patient's health might be compromised, and use of both pharmaceuticals and other types of health care might increase.13,14,15,16,17,18,19,20
Finally, physicians, pharmacists and patients might spend time and incur other costs in complying with the policy, in addition to the direct costs of program administration.21,22
Additional research into the “downstream” consequences of reference-based pricing is therefore necessary to determine the overall effects of the policy.