Reference pricing (RP) seeks to control expenditures in drug subsidy and insurance programs by limiting patient reimbursement to the lowest-cost medicine in a cluster of related medicines. Program beneficiaries have the option of receiving a fully subsidized (reference standard) drug, or paying the difference between the reference price and the retail price for partially subsidized drugs. The British Columbia Ministry of Health’s Pharmacare program introduced this practice several years ago to some controversy: its critics argue that patient health may be compromised by using drugs that are not fully interchangeable, and that use of other health services may increase as a result. This project sought to evaluate the impact of reference pricing in British Columbia by examining its effect on seniors’ use of three classes of cardiovascular drugs. It examined drug expenditures, health status, use of physician and hospital services, and the extent to which patients opted to pay for partially subsidized drugs. The project found that over a 3½ year period, expenditures on these drugs were reduced by approximately $24 million, of which approximately 25% represented costs to seniors who elected to pay for higher-cost drugs. There was no evidence of increased mortality or rates of admission to long-term care facilities after the introduction of RP, although use of physician services did increase (probably because many seniors needed to discuss treatment changes). These costs were estimated at approximately $1 million. The evidence was mixed as to the effects of RP on morbidity. A comprehensive assessment would require more investigation into such morbidity, as well as the costs of administering the program.
This project was supported by the Health Transition Fund, which was created in 1997 to provide support for evidence-based decision-making in health care reform by supporting pilot and evaluation projects which test innovative approaches to health care delivery. The views expressed herein do no necessarily represent the official policy of federal, provincial, or territorial governments.