Korean government has made efforts to contain the pharmaceutical expenditure recently. The actual transaction price (ATP) reimbursement system, introduced in 1999, lacked health care institutions`` incentives to purchase lower-priced drugs. The policy...
Korean government has made efforts to contain the pharmaceutical expenditure recently. The actual transaction price (ATP) reimbursement system, introduced in 1999, lacked health care institutions`` incentives to purchase lower-priced drugs. The policy change to the market-based ATP reimbursement system in 2010 permits the institutions to take some profits from the purchase of lower-priced drugs. In addition to the policy change, the degree of competition within a drug ingredient, purchasing power of a wholesaler, and several characteristics of a pharmaceutical are expected to be associated with the contract price of a pharmaceutical purchased through competitive bidding. This study analyzes pharmaceutical contract price data of a period of 2007 to 2010 in a public general hospital which has adopted competitive bidding system on its purchase of the pharmaceuticals. The relative price was defined as ``the contract price compared to the maximum insurance reimbursable price`` for each pharmaceutical. As the number of brands per a generic name ingredient as well as a wholesaler``s buying power increases, the lower the relative price is. Oral type as well as non-ethical drugs are more likely to have lower price. The relative price decreases yearly, but it increases in 2010 because some wholesalers and pharmaceutical manufacturers in face of the reimbursement policy change were reluctant to participate in the bidding. The study results provide information to the health institutions and the government that have tried (or will try) to manage the competitive bidding system as a way of lowering pharmaceutical price and controlling the pharmaceutical expenditure.