Buying in Bulk Impedes Patient Outcomes, Says Canadian Think Tank
Prescription drug bulk purchasing agreements can save patients money but could hinder their health outcomes as a result of reduced access to favourable medicines.
A recent report from Canadian public policy think tank, the Fraser Institute, revealed that choice and flexibility for medicines come second when drug plan sponsors opt for bulk purchasing agreements. These agreements plan to lower the per-unit costs of prescription drugs through an increase in the volume of the product procured.
Within the pharmaceutical markets, this practice occurs through merging multiple purchasing entities like municipalities, employers or provinces to gain a reduced price for medicines, typically from the manufacturer. For instance, the various provinces and territories in Canada recently agreed to purchase six popular generic drugs in bulk which resulted in potential savings of C$100 million.
By examining bulk purchasing agreements in New Zealand, the US and Europe, senior fellow at the Fraser Institute Dr Kristina Lybecker says, “Pharmaceutical costs, along with health care costs generally, are escalating at a rate that outpaces general inflation several times over, leaving government providers with the difficult task of balancing consumer needs against budgetary realities.
These savings come with the potential for negative consequences including risks to patient health and wellbeing, and reductions in pharmaceutical innovation.”
This report scrutinizes how these purchasing deals are used within the related jurisdiction by measuring the savings and then identifying any consequences.
Using past evidence, this research states that the cost savings associated with bulk purchase agreements are linked to:
- Provider pharmacies who gain a larger volume of prescriptions through reduced reimbursement and dispensing fees.
- Lowering administrative costs for a bigger number of units which reduces the per-unit cost overall.
- Improving the likelihood of manipulating the market share as a result of an increase in volumes and concentrations in a given area. Traditionally, this can lead to a better deal on rebates for pharmaceutical companies.
But this research argues that the above monetary benefits are outweighed by the damage to patient health.
Dr. Lybecker says, “These agreements can restrict access to medicines, forcing patients to pay out-of-pocket for the medicines they need as well as delay introduction of new innovative medicines.
This has the potential to harm patients and create additional expenditures on non-pharmaceutical forms of care. Indeed, the New Zealand experience clearly demonstrates poorer health outcomes, reduced innovation and a possible lack of savings overall as costs are shifted to other areas of care.”
So, while the potential savings from purchasing agreements can be vast, the report recommends that governments should not put the prospect of lower costs before patient outcomes.