Regulating ambulatory drug sales by hospitals

• Abstract
• Purpose of health policy or idea
• Characteristics of this policy
• Political and economic background
• Purpose and process analysis
• Expected outcome
• References

Abstract

Hospital pharmacies can deliver certain drugs to ambulatory patients (retrocession in French). Some drugs can only be used in hospitals but nevertheless be accessed by ambulatory patients through hospital pharmacies. In this case, hospitals are refunded by health insurance funds for the purchase of the drugs. A new legislation is introduced in December 2004 in order to control these proceedings. A list is set to limit drugs which can be accessed by ambulatory patients.

Purpose of health policy or idea

The major objectives of this policy was:

• to control the anarchic development of outpatient medicine sales by hospitals and to make sure that the status of 'reserved for hospital use' is asked only for safety reasons.
• to control the prices of drugs which are delivered by hospital pharmacies to ambulatory patients.

In France, some drugs accessible for outpatient care are not available in the community pharmacies but only in hospital pharmacies for safety reasons. Hospital pharmacies are allowed to dispense drugs reserved for hospital use to ambulatory patients in order to allow patients to continue a treatment which has been initiated during a hospitalization. The prices are negotiated freely between the hospitals and the laboratories. This process called "retrocession" which is specific to France, raised a number of problems:

First, prices were set totally freely for hospital drugs before 2004: each hospital negotiated a price with the concerned laboratory; therefore, for the same drug, different hospitals would pay different prices. So, as medicine for outpatient use are reimbursed by social insurance fund, retrocession lead to uncontrolled outpatient drug expenditure for health insurance funds. Note that in France, the prices of refundable medicine provided in ambulatory sector are set and controlled by the Economic Committee for medical products.

Second, this proceeding gave a big advantage to the pharmaceutical industry, which can escape the price regulation by asking for some drugs a status of « reserved for hospital use » even if these drugs can be purchased by ambulatory patients in the hospital pharmacies. In this way, the pharmaceutical industry introduced drugs with high prices on the ambulatory market where prices are negotiated thoroughly between social security fund and the laboratories.

Third, this policy also became a financial opportunity for hospitals to transfer in patient care expenses to the ambulatory care. In fact, hospitals reclaimed funding from the ambulatory health insurance fund for very expensive drugs which are also funded by specific budgets granted to hospitals (by regional hospital agencies).

Main points

Main objectives

The new measures aim to regulate the provision of these specific drugs "assigned for outpatient sale" by hospitals:

Only the drugs registered on a list can be provided by hospitals to ambulatory patients; the first list was set by a decree on December 2004 and includes today 729 drugs. The French health products agency (AFSSAPS) can ask the ministry to add a product on this list.

The new social security law of 2004 introduces the rules for the determination of a price which acts as a reimbursement base. Accordingly, the laboratories are now obliged to declare to the economic committee the price they will demand from hospitals; otherwise the CEPS sets the price following the framework agreement rules.

The 'final price' is defined by the Ministry of health adjusting the declared price by a fixed margin and the reimbursement by the health insurance fund is based on this final price.

This fixed margin is not set yet and is the subject of negotiations (15 Euros were initially proposed by the Ministry but the hospital federation (FHP) claims 35 Euros). During the time where this new margin is not fixed, the previous margin applies: 15% of the declared price. This margin aims to compensate for the costs of hospital pharmacies if they dispense drugs to ambulatory patients (necessity to have a counter, staff…).

Groups affected

Pharmaceutical industry, Social security fund, Hospitals

Degree of Innovation	traditional		innovative
Degree of Controversy	consensual		highly controversial
Structural or Systemic Impact	marginal		fundamental
Public Visibility	very low		very high
Transferability	strongly system-dependent		system-neutral

Political and economic background

The political and economic background is mainly the necessity to reduce public health expenditure: the government introduced in 2004 an action plan with which it aims to save 15 milliards of euros of which 3 milliards on drug expenditure (developing generics, setting of reference prices, delisting products from the positive list, reducing the hospital drug reserve).

The medicines assigned as "ambulatory drugs" by hospitals have been gradually increased in the past 10 years. Despite the exclusion of a number of drugs such as growth hormones or antiretroviral drugs, hospital reassigned list included a lot of very expensive drugs, such as some anti-cancer drugs. But the raise in hospital drug expenditure is principally due to the freedom of prices in hospital sector, which is favorable to pharmaceutical companies. In 2002, it is estimated that on average 20% of hospitals drug expenditure and one third of the drugs purchased by hospitals are financed by the ambulatory patients. These medicines represented about 8,5% of the total drugs expenditure in 2003 compared with 5,3% in 2000.

At the same time, the introduction of activity based payment in hospitals required the harmonisation of drug prices. A list of very expensive drugs is also established for acute care patients; these will be reimbursed by social insurance funds separately. The prices of these drugs are also controlled.

Purpose and process analysis

Current Process Stages

	Idea	Pilot	Policy Paper	Legislation	Implementation	Evaluation	Change
Implemented in this survey?

Origins of health policy idea

Faced with the rapidly increasing drug expenditure of social security fund, the current government took the initiative for regulation.

Initiators of idea/main actors

• Government

Approach of idea

The approach of the idea is described as:
renewed:

Stakeholder positions

Pharmaceutical industry: Clearly, the pharmaceutical industry is not happy with this new framework as now they have to negotiate the cession price with the Economic committee while previously laboratories negotiated directly with each hospital, so they had more room for maneuver;

Public/private Hospitals: The fact that price of outpatient drugs are now controlled, gives weight to hospitals for negotiating lower prices with pharmaceutical industry: if a laboratory ask a higher price than the price set by the CEPS, hospital pharmacies have no financial interest to retrocede this product. As hospitals are not obliged to have outpatient drug sales, laboratory will be loosing. 

Social Insurance Fund: The social insurance funds supporting this new framework which standardizes the reimbursement of outpatient drugs.

Actors and positions

Government
Pharmaceutical industry	very supportive		strongly opposed
Social security fund	very supportive		strongly opposed
Public/private hospitals	very supportive		strongly opposed

Influences in policy making and legislation

Problems related to retrocession have been identified for several years: since 1992, the Public Health Law has been mentioning a «list of drugs which can be delivered by some hospital pharmacies» and a corresponding «maximum price set by the ministry», but this law needed the enforcement of further legal texts to become effective and no decree had followed. The establishment of a shortened list of retrocession products has been postponed several times.

The current legislation is introduced in December 2004 following the new Social security law and objectives of reducing overall expenditure. 

Legislative outcome

success

Actors and influence

Government
Pharmaceutical industry	very strong		none
Social security fund	very strong		none
Public/private hospitals	very strong		none

Positions and Influences at a glance

Adoption and implementation

Not relevant.

Monitoring and evaluation

No mechanism is foreseen for rewieving the impact.

Expected outcome

While, these measures are too recent to calculate their overall impact with precision, a savings of about 100 million euros were expected in 2005 due to these new regulations.

The fact that the "hospital ambulatory drug" list is shorter will encourage pharmaceutical industry to demand to be included in the list of reimbursable drug list (positive list) in ambulatory scetor. So, the  access to some treatments will be easier for patients who can now easily obtain theses drugs through community pharmacies.

The "maximum price" will evidently reduce the inequalities in terms of drug prices between different hospitals and should reduce the overall expenditure of the social insurance fund.

References

Sources of Information

The actual drug list is available on www.sante.gouv.fr/htm/dossiers/retrocession/listeR.xls.

Dossier rétrocession du ministère de la santé www.sante.gouv.fr/htm/dossiers/retrocession/sommaire.htm

Avis n°04-A-03 du Conseil de la concurrence en date du 28 janvier 2004 relatif à un projet de décret concernant des catégories de médicaments à prescription restreinte et la vente de médicaments au public par certains établissements de santé et modifiant le code de la santé publique et le code de la sécurité sociale www.finances.gouv.fr/DGCCRF/boccrf/05_04/a0040017.htm

Rétrocession hospitalière des médicaments : un passe-droit lucratif - revue prescrire de novembre 2003

Rapport 2002 de la cour des compte sur le médicament à l'hôpital

Rapport annuel 2004 de la cour des comptes sur la sécurité sociale

Note de conjoncture du LEEM sur le bilan de l'année 2004

Commission des comptes de la santé - prévisions pour 2005

Author/s and/or contributors to this survey

Nathalie Grandfils

Suggested citation for this online article

Nathalie Grandfils. "Regulating ambulatory drug sales by hospitals". Health Policy Monitor, October 2005. Available at http://www.hpm.org/survey/fr/a6/3