Is It Time to Reconsider the Role of Co-Payments in Europe?

Prof Towse

In a recent editorial in the European Journal of Health Economics[1], Prof Michael Drummond of York University and Prof Adrian Towse of the OHE take a new look at an old issue: the appropriate role of co-payments in health care.

Co-payments have been in effect for decades in many countries, primarily for medicines, and designed to achieve one of two objectives. The first has been to reduce moral hazard by requiring patients to pay an ‘entry fee’ to gain access to care. The second has been to raise additional revenue to reduce the burden on the insurer.  An unintended consequence, however, has been that co-payments have made access to care inequitable.  Co-payments also have produced hidden costs when those unable to afford co-payments forgo needed care, increasing the possibility of poor health outcomes and/or more costly delayed treatment.

As the authors note, ‘Patient copayments have therefore never been very popular with health economists from countries with socialized healthcare, because of their expected negative impacts on equity, without corresponding benefits in terms of increased efficiency’.  Nevertheless, co-payments are applied in various forms throughout Europe, as the table below shows.

Overview of the application of co-payments in Europe[2]
1. No co-pays The Netherlands and Malta
2. Flat-rate Austria, Italy, UK (with implicit ceiling prescription pre-payment certificate)
3. Percentage rates Belgium, France, Greece, Estonia, Finland (with annual ceiling), Latvia, Lithuania, Poland, Portugal, Slovakia, Slovenia and Spain
4. Uniform % Cyprus, Germany, Norway
5. Co-insurance, with % decreasing with accumulated expenditure over a given period and with a ceiling Denmark and Sweden
6. Deductible Ireland, Sweden
7. Many countries have explicit exemptions for certain products, as well as for some patient and socio-economic groups

Recently, the debate over the role of co-payments for drugs has once again come to the fore, both because of the general financial crisis facing many governments and because of the escalating costs of some types of medicines -- cancer drugs, for example.  Restricting access to these costlier therapies has raised two sets of questions (1) whether such restrictions accurately reflect societal preferences about access to care and (2) whether patients should be allowed to pay an additional amount to gain access to medicines not fully covered, or not covered at all, by the public health care system.  The authors note that ‘If the role of patient co-payments for pharmaceuticals in Europe is to be reconsidered, it needs to be done within a policy framework that recognises the joint objectives of efficiency, equity and budgetary responsibility’.

The authors see a paradigm shift in both the rationale for and the operation of co-payments. Under the ‘old world view’, decisions about therapy were made primarily by the patient and prescriber, with equity and efficiency issues limiting the usefulness of co-payments. In the ‘new world view’, the decisions about the value of the therapy are made by the third-party payer, which both determines pricing/availability based on assessments of value and explicitly shapes prescribing decisions through various guidelines and incentives.

In this new world, the authors posit, co-payment could become a way of recognising the heterogeneity of individual patient preferences while avoiding unequal access based on ability to pay. If value based pricing (VBP) is applied in a ‘rigorous and responsible fashion’, the payer’s willingness to pay threshold and the resulting VBP price ‘should be largely consistent with the values and preferences of the vast majority of the insured population’. Thus, the price set by the company and the price acceptable to the payer should both be at a level that minimises patients’ opting to pay an additional amount for access to any particular therapy.  If a substantial proportion of patients was willing to pay more, this would be a signal that the willingness to pay threshold was set too low in the first place.

From a practical point of view, one possible downside of co-payments in a value-based system is the administrative cost of collecting payments from patients. The authors note that nearly all European countries already have a mechanism for collecting co-payments in some form, suggesting that any additional cost would be minimal.

The authors stress that the success of this approach depends both on administrative feasibility and on third party payers setting prices that minimise the number of patients opting for treatments that require co-payments.

[1] Drummond, M. and Towse, A. (2012) Is it time to reconsider the role of patient copayments for pharmaceuticals in Europe? European Journal of Health Economics. 13(1), 1-5. [2] Espin, J. and Rovira, J. (2007) Analysis of differences and commonalities in pricing and reimbursement systems in Europe. Final Report. Brussels: European Commission.


Posted in Health Care Systems, Pricing and Reimbursement | Tagged External publications