Drug costs
From Ganfyd
The essential point is that doctors in most countries have great difficulty in estimating the cost of their prescriptions accurately and that across countries and training systems the main factor that influences doctor's drug price awareness is the cost of the drug to the patient as feed back to them by the patient. While factors such as market freedom, differential pricing formulas and distortions in perception all can play a role in determining a drug price, it seems that human factors rule. Actually doctors generally want cost information but find it inaccessible. They consistently overestimate the cost of inexpensive drugs and underestimate the cost of expensive ones with 31% of off the cuff estimates within 25% of the true cost. [1]. There can be marked variation in public funding arrangements. However general guides to drug cost do exist, similar to the British National Formulary in the UK. The potential impact of economic analysis in guiding prescribing where cost issues are viewed by the prescriber as marginal seems small.
Drug costs are determined by very complex mixture of commercial market decisions, managed market decisions, regulatory action, development costs and individual illness and very rarely reflect the drugs clinical effectiveness. In the case of medicines without a manufacturing license the medicine may only be procurable in a totally unregulated market, while a licensed medicine is likely to have regulation that produces major cost implications in it self but more predictable pricing in the larger economies. In smaller economies it has been known for medicines to be effectively unavailable following commercial marketing decisions as a result of central price controls.
Almost all health economies with some form of regulated market and tariff for healthcare related activity not paid for by the patient themselves will have special provision for high cost drugs such as chemotherapy.
In publicly funded healthcare systems such as the NHS the true cost of a treatment is risk shared over a population. This will also be be case with universal compulsory health insurance. This raises the ethical issue of the value assigned by the funding population to a particular health gain for an individual. NICE and the SMC are organisations that help provide advice, often based of QUALs and a particular health gain threshold. The political context is all however as the UK pharmaceutical industry is major employer and contributor to the countries economy. This means that the NHS may have little real control over its drug costs as political decisions may have major impact and unintended consequences including the distortion of healthcare prioritisation
GPs have indicative drugs budgets as an instrument of promoting cost awareness. Tariff is a similar instrument for secondary care providers. Unlicensed medicines and high cost drugs can create distortions in evidenced based delivery with such systems
