European Health Care Policy and Health Care Reform

Panos KanavosLondon School of Economics

Athens, 21 June 2011

Outline

• Key problems in European health systems• Main responses• Incentives and quality

• Example: P4P and incentives in outpatient care

• Improving efficiency in multi-stakeholder settings

• Example: pharmaceutical policy

• Conclusions

European Healthcare Problems

1. Demographic pressures2. Lifestyle issues3. Inappropriate variation in clinical practice4. Technical innovations5. Public expectations6. Resource constraints and sustainability

Health spending and national income, 2008

Italy

Spain

Austria

Finland

GermanySweden

Denmark

Netherlands

Slovenia

Portugal

United Kingdom

Slovak RepublicCzech RepublicHungary

Estonia

Poland

France

Luxembourg

Greece

Ireland

0

1000

2000

3000

4000

5000

0 10000 20000 30000 40000 50000 60000 70000 80000 90000

GDP per capita (Euro)

To

tal

healt

h e

xp

en

dit

ure

per

cap

ita (

Eu

ro)

Pharma spending and national income, 2009

ItalySpain Austria

Finland

Germany

Sweden

DenmarkNetherlandsSlovenia

Portugal

United KingdomSlovak Republic

Czech Republic

Hungary

Estonia

Poland

France

Luxembourg

GreeceIreland

0

200

400

600

800

0 10000 20000 30000 40000 50000 60000 70000 80000 90000

GDP per capita (Euro)

To

tal

ph

arm

ac

eu

tic

al

ex

pe

nd

itu

re

pe

r c

ap

ita

(E

uro

)

Maastrichtcriteria

Maastrichtcriteria

Already prior to the economic crisis, governments were facing severe difficulties to manage budget deficits and debt burdens ...

1. Carmen M. Reinhart and Kenneth S. Rogoff, "Growth in a Time of Debt", NBER Working Paper No. 15639, Jan 2010Source: Bank for international settlements; Economy Watch 2010

20072007 20102010

Bubble size corresponds to GDP (current prices $)

Debt levels with negative impact on growth1

-6

-3

0

3

6

9

12

15

0 20 40 60 80 100 120 140

Budget deficit (% of GDP)

Public debt (% of GDP)

Mexico

Russia

S. Korea

India

BrazilChina

US

UK

Spain

PortugalNetherlands

Italy

Ireland

Greece

Germany

France

Unemployment rate: <5% = ; 5-10% = ; 10-14% = ; >14% =

-6

-3

0

3

6

9

12

15

0 20 40 60 80 100 120 140

Budget deficit (% of GDP)

Public debt (% of GDP)

Mexico

Russia

S. Korea

IndiaBrazil

China

US

UK

Spain

Portugal

Netherlands

ItalyIreland

Greece

Germany

FranceHigher GDP generally implies higher stability if all other parameters similar

Higher GDP generally implies higher stability if all other parameters similar

Responses

1. Service re-engineering and improving efficiency

2. Use of clinical guidelines3. Disinvestment4. Public health5. Health Technology Assessment and

Value for money6. Performance measurement7. Quality

The debate on Efficiency

• … Strong focus to improve efficiency, through: Separation of purchases from providers ( e.g. UK) Competition between providers (e.g. UK, Germany, The Netherlands, etc) Competition between insurers (e.g. Germany, The Netherlands) Decentralisation and budget devolution (e.g. UK, Italy, Spain, Scandinavia) DRG payments (will influence the possible hospital investments in new

technologies) and performance related payments (US, EU) Increasing patient choice Hospital restructuring, alternatives to hospital care Attempt to improve efficiency through performance indicators (many) National service frameworks Quality of health care Incentives Service re-engineering Extensive private provision Demand-side cost containment The changing nature of health professions Tendering for outpatient drugs Private provision

Source: European Observatory, CMS.

Incentives and Quality

Payment for Performance (P4P)

• International trend– Adopted in many high income countries: US, UK, Australia, NZ,

Italy, Netherlands, Sweden, Norway, Germany, France – Also in middle and low income countries: Cambodia, Rwanda,

Haiti, Philippines, Uganda

• Main idea: Linking payment to performance measures

• Foundations: Existing payment mechanisms do not reward providers for higher quality

• Increased and better performance measurement

Percent of primary care doctors reporting any financial incentives* targeted on quality of care

* Financial incentives are defined as the receipt or the potential to receive payment for: clinical care targets, high patient ratings, managing chronic disease/complex needs, preventative care or QI activities.

Source: 2006 Commonwealth Fund International Health Policy Survey of Primary Care Physicians

Doctors Can Receive Any Financial Incentives

81 80

7065

89

6258

50

36 35

10

0

25

50

75

100

UK NET NZ ITA** AUS CAN GER FRA US NOR SWE

Percent who can receive any financial incentives for targeted care or meeting goals*

* Can receive financial incentives for any of six: high patient satisfaction ratings, achieve clinical care targets, managing patients with chronic disease/complex needs, enhanced preventive care (includes counseling or group visits), adding nonphysician clinicians to practice and non-face-to-face interactions with patients. Italy not asked non-face-to-face.

Source: 2009 Commonwealth Fund International Health Policy Survey of Primary Care Physicians.

Incentives for quality: some examples

http://www.leapfroggroup.org/

http://www.bridgestoexcellence.org/bte/

Doctors Office Quality (DOQ) Projecthttp://cms.hhs.gov/quality/doq/

Quality and Outcomes Frameworkhttp://www.qof.ic.nhs.uk/

Pay for Performance & Performance Management System

P4P: Outcomes - Evidence from the UK QOFs in diabetes – London SHA

DM12: The percentage of patients with diabetes in whom the last blood pressure is 145/85 or less;

DM17: The percentage of patients with diabetes whose last measured total cholesterol within the previous 15 months is 5mmol/l or less;

DM23: The percentage of patients with diabetes in whom the last HbA1c is 7 or less (or equivalent test/reference range depending on local laboratory) in the previous 15 months;

DM25: The percentage of patients with diabetes in whom the last HbA1c is 9 or less (or equivalent test/reference range depending on local laboratory) in the previous 15 months.

Outcomes: Evidence from UK QOFs – individual SHAs, 5 indicators

Multiple stakeholders and efficiency: the case of pharmaceuticals

National and regional wholesaler presence in select EU27 member states (2010) - I

The absolute number of wholesalers in a country varies significantly across the EU. Greece, Italy, Spain, Estonia, Romania and the Czech republic have the largest number of wholesalers, whether regional or national.

0 20 40 60 80 100 120

UKSweden

SpainSloveniaSlovakiaRomaniaPortugal

NetherlandsLuxembourg

ItalyIreland

HungaryGreece*

GermanyFranceFinlandEstonia

DenmarkCzech Republic

BulgariaBelgiumAustria

National Wholesalers Regional Wholesalers

Source: Kanavos, Schurer and Vogler, 2011.

Number of community pharmacies across the EU27 region: total number of pharmacies

Greece, Bulgaria, Cyprus and Malta have the highest number of pharmacies per 1000 population, while Denmark, Sweden and Slovenia have the lowest

0 0.2 0.4 0.6 0.8 1

GreeceBulgariaCyprus

MaltaBelgium

SpainLithuania

EstoniaLatvia

FranceIreland

ItalySlovakia

GermanyHungary

PolandPortugal

CzechUK

LuxembourFinlandAustria

NetherlandsSloveniaSweden

Denmark

Number of Pharmacies per Capita (per 1,000 population, 2005)

Source: Kanavos, Schurer and Vogler, 2011.

HP ex-factory price (EFP) (upper panel) and net pharmacy retail price (PRP) (lower panel) (including dispensing fees but no VAT) ranking across the EU27 MS as of 15 June 2009.

Branded

MP ex-factory price (EFP) (upper panel) and net pharmacy retail price (PRP) (lower panel) (including dispensing fees but no VAT) ranking across the EU27 MS as of 15 June 2009.

Branded

Source: Kanavos, Schurer and Vogler, 2011.

Presentation of branded HP-A (expensive), MP-S (mid-priced) and LP-HC (low priced) ex-factory price (EFP), wholesale (WS) margin/markup,

pharmacy (Ph) margin/markup

Branded

Source: Kanavos, Schurer and Vogler, 2011.

Generic LP-HC ex-factory price (EFP) (upper panel) and net pharmacy retail price (PRP) (lower panel) (including dispensing fees but no VAT) ranking across the EU27 Member States, as of 15

June 2009

Generic

Source: Kanavos, Schurer and Vogler, 2011.

LP-HC (generic): EFP, PPP, and net PRP across EU27 Member States, as of 15 June 2009.

Generic

Source: Kanavos, Schurer and Vogler, 2011.

Drug spend per capita in comparative terms, 2000 – 2008/9

0 100 200 300 400 500 600 700 800

Poland

EstoniaCzech Republic

Hungary

United KingdomSlovak Republic

Slovenia

NetherlandsPortugal

Denmark

Luxembourg

SwedenFinland

Italy

SpainAustria

Germany

FranceIreland

Greece

Euro per capita

2008

2000

For Greece data are for 2009.

Source: Kanavos et al, European Parliament, 2011.

Impact of tendering for outpatient drugs - The NetherlandsTop – 10 preferred packs by market impact, May-June 2008

Product Preferred supplierPPP1 (May

2008)PPP1 (June

2008)Change

1. Omeprazole tablets/capsules, 20mg

Ratiopharm €0.36 €0.05 -88%

2. Alendroninezuur tables, 70mg

Centrafarm€4.99 €0.36

-93%

3. Omeprazole tablets/capsules, 40mg

Centrafarm€0.65 €0.09

-86%

4. Paroxetine tablets, 20mg Ratiopharm €0.37 €0.07 -82%

5. Simvastatin tablets, 40mg

Actavis€0.27 €0.04

-84%

6. Pravastatin tablets, 40mg Focus Farma €0.54 €0.13 -76%

7. Simvastatin tablets, 20mg

Ratiopharm/Actavis€0.17 €0.03

-85%

8. Tamsulozine tablets/capsules, 0.4mg

Centrafarm€0.34 €0.07

-80%

9. Amlodipine tablets, 5mg Ratiopharm €0.19 €0.03 -85%

10. Citalopram tablets, 20mg

Ratiopharm€0.34 €0.04

-88%

Value-based pricing in EU/Switzerland, 2010: use clinical and/or economic evidence to assess extent of (clinical) benefits and value of

innovation

Current practice• Denmark• Switzerland• Sweden• Finland• The Netherlands• England & Wales [NICE]• Portugal• Norway• Baltic states (Estonia, Latvia,

Lithuania)• Poland• Hungary

Under preparation or rising in influence

• France• Spain• Slovenia• Czech Republic• Slovakia

Concluding remarks

• Resources remain scarce and will continue to do so

• Extensive reforms focusing on quality and incentives

• Efficiency remains a key target• Service frameworks to target chronic disease• Sustainability: guarantee with continuous

actions; all stakeholders bear part of the burden to avoid imbalances