Question

1) Describe the 3 mechanisms US insurance companies employ to control expenditures on pharmaceutical products.

2) What is a drug formulary?

Answer 1

1) Control Mechanism of US insurance companies on Pharmaceutical products:

Cost shifting policies:

The insurance companies shift the burden of drug reimbursement into drug manufacturers, consumers, and physicians. Make the physician and consumers choose the cost-effective drug. Thereby reduce the expenditure of pharmaceutical products.

Cost-sharing practices:

Initiation of cost-sharing reduces over-utilization of drugs. Implement of copayment makes the consumer choose less expensive medication. Comprehensive cost-sharing limit the spend on the drug.

Encourage Cost-benefit prescription:

Encourage the physicians to prescribe less expensive medication and promote them as a primary decision-maker in prescribing drug choice. Offering a physician with an incentive for prescribing the cost-effective drug. Inhibit individual pharmaceutical sale of medication to control cost.

2) The drug formulary is also called drug list which consists of a list of brand and generic name drugs approved by the health insurance plan. A practicing physician and pharmacist should follow the drug formulary. These drugs are efficient to use, cost-effective, and safe to administer. It contains the clinical information of dosage, indication, contraindication, and side effects of the drug. It benefits both the consumer and the provider.