Drug Insurance Utilization Management Policies and “Reference Pricing”: An Illustrated Commentary on the Article by Vittorio Maio and Colleagues

March 2005 | Martin Maclure

“Pharmacy utilization and the medicare Modernization Act,” the article by Vittorio Maio, Laura Pizzi, Adam R. Roumm, Janice Clarke, Neil I. Goldfarb, David B. Nash, and David Chess in this issue of the Milbank Quarterly (Maio et al. 2005), includes a timely review of studies evaluating drug insurance policies relevant to the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003. Unfortunately, the review excludes the studies of one of the best-evaluated policies of drug insurance for seniors (Grootendorst et al. 2001, 2002; Hazlet and Blough 2002; Marshall, Grootendorst, et al. 2004; Narine, Senathirajah, and Smith 2001; Schneeweiss, Dormuth, et al. 2004; Schneeweiss, Maclure, and Soumerai 2002; Schneeweiss, Soumerai, Glynn, et al. 2002; Schneeweiss, Soumerai, Maclure, et al. 2003; Schneeweiss, Walker, et al. 2002). The studies may have been excluded because the policy, misleadingly called “Reference-Based Pricing,” sounds like a pricing policy. In fact, it is an insurance policy introduced in 1995 by British Columbia’s public drug benefit plan, PharmaCare, covering all people over age 65 and families on income assistance or with unusually high drug needs. Although the British Columbian government belatedly renamed it the “Reference Drug Program,” a more descriptive name would have been “Equal Subsidy Program” because it offers the same dollar coverage for similar drugs, regardless of the manufacturers’ prices. Other Canadian provinces have adopted similar policies and called them Maximum Allowable Costs (MACs), as have some U.S. managed care organizations.

Author(s): Martin Maclure

Keywords: reference drug pricing; pharmaceutical utilization management; Canadian health care

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Volume 83, Issue 1 (pages 131–147)
DOI: 10.1111/j.0887-378X.2005.00338.x
Published in 2005