Our study was the first price survey undertaken for medicines used in hospitals in Austria. It was done for a sample of 12 active ingredients in a few hospitals. Even though we collected several price data points, our sample of comparable presentations (in the same pharmaceutical form, strength and pack size) was rather small, and sometimes the “most commonly used form” identified for the comparative analysis was not used in all hospitals surveyed. We acknowledge the limitations with regard to the number of products and hospitals, and we are aware that, as some of the products are only used in hospitals and not even included in the out-patient reimbursement list (“Erstattungskodex”, EKO), the comparison of the hospital prices to the out-patient prices could be considered as only of theoretical character for these products.
Despite these limitations, we believe that this price survey provides added value to the scientific community and to policy makers: Our study contributes considerably to transparency since no price survey for medicines in hospitals had been published before. Additionally, it brings attention to an area of health care which is of major relevance both economically and in terms of quality. Further, we developed and piloted a methodology which can easily be adopted and used for future surveys in Austria and other countries with a similar health care system (e.g. European Union Member States).
The development of a methodological design was a key prerequisite from a technical point of view. Another requirement was the building of trust with the hospital pharmacists, who were the data providers, and the establishment of a common understanding of the study’s rationale. In Austria, though hospital pharmacists appear to be well connected, in particular via the associations (Austrian Association of Employed Pharmacists, Austrian Association of Hospital Pharmacists), prices of medicines are not officially shared among them nor are they published, so the communication of price data to us as external people was a considerable indicator of trust.
The lack of transparency about the medicine prices paid by hospitals can, to some extent, be explained by the procurement policies in Austria. A major part of medicines is purchased in a decentralized way, mostly directly from the manufacturer, by the individual hospitals; and the price is the outcome of negotiations. There are initiatives of joint purchasing, in particular for high-cost medicines, by the hospital owner organizations. The use of tenders is still low, but increasing in Austria . There is a similar pattern in the procurement of medicines for hospitals in Germany and in several Central and Eastern European countries, whereas tendering of medicines, in many cases done at central or regional level, is the key purchasing strategy in the remaining EU Member States [8, 15]. Procurement based on negotiations, in particular at the level of individual hospitals, might negatively impact the transparency of prices since the purchasers are told by the suppliers that they would be granted the best prices if they in return agreed to keep them confidential. However, our results could not confirm better prices for individual hospitals since price differences among hospitals were identified in very few cases.
For the out-patient sector, well-developed and tested approaches for price surveys exist [28–31, 42]. Developing the survey methodology, we had to understand if there is a price type of the out-patient sector to which the hospital list price and the actual price might correspond. Our assumption that the official hospital list price in Austrian hospitals equals the ex-factory price was confirmed by the hospital pharmacists involved in the price survey. No corresponding price type of the out-patient sector could be identified for the actual hospital price since it is a hospital specific price.
The survey of the actual prices also served to test the hypothesis of the low actual hospital prices and the provision of cost-free medicines (loss leaders) in Austrian hospitals. We found some differences between the actual hospital prices and the official prices (ex-factory prices). These price differences were, however, observed for only some, usually lower-priced medicines. In cases where price differences were identified, the actual prices were, in most hospitals, lower (or even zero), with the exception of one hospital which had higher prices for specific, mostly expensive on-patent medicines. This hospital had no hospital pharmacy; the “pharmaceutical depot” in charge of the provision of medicines in that hospital was supplied by a wholesaler. The higher price in that hospital was attributable to the wholesale mark-up which was included in their actual prices.
While the extent of discounts granted did not differ among the hospitals surveyed, the results revealed a pattern with regard to the kind of medicines: In general, no discounts could be negotiated for the high cost medicines. This is, for instance, the case for three of the four oncology medicines included in our sample, all of them on-patent. The price survey results supported findings of interviews performed with the hospital pharmacists before collecting the price data. Hospital pharmacists stated that for medicines which “really count” (i.e. accounting for a major part of the hospital pharmaceutical budget) hospitals are not successful in negotiating discounts, and they have to pay the full, i.e. ex-factory, price. The study results suggest that there appears to be little or no room for price reductions for “monopoly products”, i.e. medicines with no therapeutic alternatives.
We acknowledge that ex-post rebates were not taken into account in our price survey since they could not be assessed by the data providers at the time of the price data collection. Rebates are granted by the suppliers at the end of the year, with reference to the sales volume of a hospital. They are known to be a common commercial instrument in European countries (e.g. Portugal) [15, 39], and their existence in Austria was confirmed by the pharmacists of the sample hospitals.
Price reductions in the form of discounts (i.e. reflected in the actual hospital prices) were observed whenever therapeutic alternatives were available. These were generics, but competition also appeared to be triggered by original products considered as alternatives. We observed this pattern for the immunoglobulins whose lower actual hospital prices compared to their official hospital list prices might be attributable to the choice of different products (brands) available.
In Austria a cost-free provision of medicines to hospitals is allowed and applied. This practice is forbidden in some European countries (e.g. Denmark, Hungary, Italy, Lithuania, and United Kingdom) , while there are no explicit provisions in some others (e.g. Bulgaria) . Discounts and rebates of up to 100%, which eventually make the products cost-free, are known from a few other countries (e.g. Portugal, Slovakia) [39, 40]. In our price survey on Austria, we found the provision of cost-free medicines only in one indication: cardiology. But all cardiovascular medicines of the sample, irrespective of their patent status, were supplied cost-free.
The group of medicines to treat cardiovascular diseases, which account for a high share in the disease burden , could be characterized as “strategic medicines” from the industry’s point of view. Cardiovascular medicines account for high volumes in the out-patient sector and thus contribute to high expenditure . As the starting treatment with specific (cardiovascular) medicines by specialists impacts the future use , manufacturers are interested to get the product applied already in hospitals in order to initiate follow-up prescriptions in out-patient setting .
Prioritization is most important when resources are scarce : Hospital pharmacists have to decide which medicines (high-cost medicines for few patients or a larger quantities of lower-priced medicines for larger patient populations) they will purchase given the limited budgets, and whether they agree to receive discounted and cost-free medicines in spite of the negative impact for the overall health care system. Particularly in the case of financial pressure, hospital pharmacists, who are accountable to the hospital management, are happy about any savings achieved by discounted and cost-free medicines. They are aware of the fact that with accepting free-cost medicines they impact the continuing treatment with these products after discharge of the patient (personal communication). Their procurement strategies result from dual financing, with different payers for the pharmaceutical bill in the out-patient and hospital sectors. The authors see a need for the development and implementation of effective policy options which could improve the medicines management at the interface of hospital and out-patient sector. Good practice examples from other countries (e.g. joint reimbursement lists in Stockholm County , or Scotland ) might serve as models.
The hospital sector has often been criticized for its assumed lower hospital prices compared to the out-patient sector and for cost-free medicines. Our price collection confirmed that hospital prices, even if not discounted, are always lower than out-patient retail prices – irrespective of the out-patient price type (pharmacy retail price or reimbursement price). This is attributable to the involvement of more distribution actors in the out-patient sector and their statutory remuneration for the cost for handling distribution. The different price levels in the in-patient and out-patient sectors, which is explained by these factors, is not of concern for policy makers, but the critical issue is that, via the practice of granting discounts and providing cost-free products, the treatment of patients is likely to be started with medicines which account for high volume and eventually high expenditure where medication is continued with these products in the out-patient sector.