1. European Health Care Policy and Health Care Reform Panos Kanavos London School of Economics Athens, 21 June 2011

2. 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

3. European Healthcare Problems 1.Demographic pressures 2.Lifestyle issues 3.Inappropriate variation in clinical practice 4.Technical innovations 5.Public expectations 6.Resource constraints and sustainability

4. Health spending and national income, 2008

5. Pharma spending and national income, 2009

6. Maastricht criteria 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 2010 Source: Bank for international settlements; Economy Watch 2010 2007 2010 Bubble size corresponds to GDP (current prices $) Debt levels with negative impact on growth 1 Budget deficit (% of GDP) Public debt (% of GDP) Mexico Russia S. Korea India Brazil China US UK Spain Portugal Netherlands Italy Ireland Greece Germany France Unemployment rate: 14% = Budget deficit (% of GDP) Public debt (% of GDP) Mexico Russia S. Korea India Brazil China US UK Spain Portugal Netherlands Italy Ireland Greece Germany France Higher GDP generally implies higher stability if all other parameters similar

7. Responses 1.Service re-engineering and improving efficiency 2.Use of clinical guidelines 3.Disinvestment 4.Public health 5.Health Technology Assessment and Value for money 6.Performance measurement 7.Quality

8. 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.

9. Incentives and Quality

10. 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

11. 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

12. Doctors Can Receive Any Financial Incentives 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.

13. Incentives for quality: some examples http://www.leapfroggroup.org/ http://www.bridgestoexcellence.org/bte/ Doctors Office Quality (DOQ) Project http://cms.hhs.gov/quality/doq/ Quality and Outcomes Framework http://www.qof.ic.nhs.uk/ Pay for Performance & Performance Management System

14. 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.

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

16. Multiple stakeholders and efficiency: the case of pharmaceuticals

17. 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. Source: Kanavos, Schurer and Vogler, 2011.

18. 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 Source: Kanavos, Schurer and Vogler, 2011.

19. 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

20. 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.

21. 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.

22. 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.

23. LP-HC (generic): EFP, PPP, and net PRP across EU27 Member States, as of 15 June 2009. Generic Source: Kanavos, Schurer and Vogler, 2011.

24. Drug spend per capita in comparative terms, 2000 – 2008/9 For Greece data are for 2009. Source: Kanavos et al, European Parliament, 2011.

25. Impact of tendering for outpatient drugs - The Netherlands Top – 10 preferred packs by market impact, May-June 2008 ProductPreferred supplier PPP 1 (May 2008) PPP 1 (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%

26. 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

27. 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