Reference-based pricing
=======================

* Bob Nakagawa
* Rick Hudson

We found the articles by Lutchmie Narine and colleagues1 and Chantal Bourgault and associates2 to be of particular interest, as we have been involved in the development of the Reference Drug Program in BC from its inception. The program has received both criticism and accolades since it was launched in the fall of 1995. Criticism has come primarily from the pharmaceutical industry, as any savings that governments achieve from the application of the policy are also reduced profits for the drug companies. Indeed, it has been stated that one gauge of any policy's effectiveness is the vigour of the industry response.3 Accolades have come from those who recognize the importance of a sustainable drug program for the long term.

Narine and colleagues1 attempt to draw correlations between the reference pricing policies in Europe and those in BC. Although there may be some similarities, there are significant differences. The primary focus of the policy in BC is the baseline prescribing habits of physicians. The policy is designed to ensure that the most cost-effective agent within a drug class is used initially. If there are particular patient circumstances that would justify the use of a more costly agent, such as an adverse reaction or lack of therapeutic effect, the alternative agent is funded fully. In addition, the Reference Drug Program in BC does not target generic equivalents as stated in the article, but rather it targets competing drugs in a class.

Bourgault and associates2 review the utilization of a select group of angiotensin-converting-enzyme (ACE) inhibitors, as well as hospital admissions and physician visits. Although the authors speculate that there are therapeutic differences among the ACE inhibitors, they present little evidence to support this assertion.

We agree with the critical comments by editorialists Paul Grootendorst and Anne Holbrook.4 There are many plausible explanations for the differences in health services utilization rates observed. In addition to it being the ACE inhibitor of choice in hypertension at the time, captopril was likely available on all the hospital formularies in the province at the time. As it is unlikely that many hospitals included lisinopril on their formularies in the early 1990s, it is entirely possible that patients in hospital were preferentially prescribed captopril simply because of its availability and therapeutic efficacy.

## References

1.  1. Narine L, Senathirajah M, Smith T. Evaluating reference-based pricing: initial findings and prospects. CMAJ 1999;161(3):286-8.
    
    [Abstract/FREE Full Text](http://www.cmaj.ca/lookup/ijlink/YTozOntzOjQ6InBhdGgiO3M6MTQ6Ii9sb29rdXAvaWpsaW5rIjtzOjU6InF1ZXJ5IjthOjQ6e3M6ODoibGlua1R5cGUiO3M6NDoiQUJTVCI7czoxMToiam91cm5hbENvZGUiO3M6NDoiY21haiI7czo1OiJyZXNpZCI7czo5OiIxNjEvMy8yODYiO3M6NDoiYXRvbSI7czoyMToiL2NtYWovMTYyLzEvMTIuMy5hdG9tIjt9czo4OiJmcmFnbWVudCI7czowOiIiO30=) 

2.  2. Bourgault C, Elstein E, Le Lorier J, Suissa S. Reference-based pricing of prescription drugs: exploring the equivalence of angiotensin-converting-enzyme inhibitors. CMAJ 1999;161(3):255-60.
    
    [Abstract/FREE Full Text](http://www.cmaj.ca/lookup/ijlink/YTozOntzOjQ6InBhdGgiO3M6MTQ6Ii9sb29rdXAvaWpsaW5rIjtzOjU6InF1ZXJ5IjthOjQ6e3M6ODoibGlua1R5cGUiO3M6NDoiQUJTVCI7czoxMToiam91cm5hbENvZGUiO3M6NDoiY21haiI7czo1OiJyZXNpZCI7czo5OiIxNjEvMy8yNTUiO3M6NDoiYXRvbSI7czoyMToiL2NtYWovMTYyLzEvMTIuMy5hdG9tIjt9czo4OiJmcmFnbWVudCI7czowOiIiO30=) 

3.  3. National Forum on Health. *Canada health action: building on the legacy.* Ottawa: The Forum; 1997.
    
    

4.  4. Grootendorst P, Holbrook A. Evaluating the impact of reference-based pricing [editorial]. CMAJ 1999;161(3):273-4.
    
    [FREE Full Text](http://www.cmaj.ca/lookup/ijlink/YTozOntzOjQ6InBhdGgiO3M6MTQ6Ii9sb29rdXAvaWpsaW5rIjtzOjU6InF1ZXJ5IjthOjQ6e3M6ODoibGlua1R5cGUiO3M6NDoiRlVMTCI7czoxMToiam91cm5hbENvZGUiO3M6NDoiY21haiI7czo1OiJyZXNpZCI7czo5OiIxNjEvMy8yNzMiO3M6NDoiYXRvbSI7czoyMToiL2NtYWovMTYyLzEvMTIuMy5hdG9tIjt9czo4OiJmcmFnbWVudCI7czowOiIiO30=)