Abstract
Health costs, including the cost of pharmaceuticals, have been rising throughout the world for 30 years. Governments are determined to reduce public expenditure on health; pharmaceuticals are an obvious, if frequently inappropriate, target. Cost containment measures include positive and negative lists, permission for more over-the-counter drugs, reference pricing and other price and profit controls, generic substitution, patient copayments, and drug budgets for general practitioners.
These methods have been tried in various countries and their experiences are reviewed. The advantages and drawbacks of the methods to patients, physicians, and the pharmaceutical industry are discussed. Only the general practitioner budgets appear to have caused a sharp fall in spending on pharmaceuticals.
The industry response has been mixed. Some of the research-based companies have followed confrontational policies with their governments; others have tried collaborating. Companies aim at making the best profits they can consistent with not generating adverse publicity. The generics companies, which appear at first sight to profit from cost-cutting measures, are actually vulnerable to competition in generics from the research-based companies.
The change that has come about in recent years is that policy makers are collaborating internationally. The idea that multinationals can confront governments is now seen to be untrue. The best prospect for pharmaceutical companies is to reach agreements with governments which enable them to flourish if they are innovative and to survive if they are not.
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