The policy means that when a number of medicines contain the same active agent, only the cheapest medicine will be reimbursed. This means that prices are being pushed to their lowest – Mr Bongers is quoted as saying “simvastatin is cheaper than a packet of chewing gum. The generics industry in The Netherlands supplies almost 60% of the medicines at 15% of the costs”. It should be clear that this policy has been introduced by the health insurance companies, not the government.

So what is the catch for the thrifty Dutch? It seems that some manufacturers are no longer making some products, as it is no longer economically viable. So the picture is moving away from one of healthy competition. Once a single manufacturer has cornered the lowest price of a medicine, within one to two months they find themselves having to supply far greater quantities. But because the preference policy shuts out losing manufacturers from competing for anywhere between six months and two years, stocks may be run down even as they compete for a contract. This juggling act means patients are faced with not being able to get their medicines.

The health insurance companies allow pharmacists to supply other brands if the cheapest is not available, imposing a variety of rules. However it wastes a lot of pharmacist time to source a different supply, and the patient may have to change brands more often. If this does not solve the problem pharmacists are even allowed to supply out-dated stock provided it passes a shelf-life test. This might be available if a manufacturer has missed the contract for cheapest supplier, and is left with a lot of unsellable stock. It can sometimes be obtained at an even lower price. But this is less than satisfactory again for the patient.

The temporary exclusion of manufacturers also has the effect of discouraging development of new generic medicines. If a number of firms decide to invest in a new drug as it comes off patent, only one will be accepted and the others will be excluded for the duration of the reimbursement contract. It is expensive to develop and register a new generic, and the results of this further barrier will only be seen in a few years’ time.

In Mr Bongers’ view, the only way to favour continuity of supply is to favour continuity of production by changing the preference policy.

Reference

Edwin Bos. Door preferentiebeleid. Pharmaceutisch Weekblad. 2010 May 23. p.13-5.