“We anticipate that physicians work for the welfare of their patients as a perfect agent. However, a physician may behave as an imperfect agent in the real world due to asymmetric information.³⁰ Prescriptions are a complex process affected by a physician, patient, policy, and environmental factors.^10,31,32-35 One investigation³⁶ reviewed 33 related studies for determinants of prescribing behavior and found identifying physicians, drug price, and marketing factors as the frequently cited determinants. A recent survey of Iranian physicians³⁷ reported that environmental and marketing factors did not have an influence, whereas drug characteristics, patient conditions, and insurance type affect doctors’ prescription decisions. Hellerstein³⁸ found that doctors in Health Maintenance Organizations or pre-paid insurance schemes were more likely to prescribe cheaper generic drugs.

“The Pay-for-Performance Program reimburses physicians for their prescription behaviors and efficiency.^22,39 If doctors react to financial inducements, we expect that an incentive scheme such as the Outpatient Prescription Incentive Program in Korea may affect physicians’ prescription behaviors and consequently contribute to the suppression of drug cost. However, our findings showed that it was insufficient to induce the appropriate use of drugs similar to previous studies.^40-42 Although, the Pay-for-Performance System that dis-incentivizes clinics that overuse antibiotics could partially suppress antibiotic use, the increases in total drug expenditure per prescription were more significant in our study.^43,44“

Source: Kim, W., Koo, H., Lee, H., & Han, E. (2022). The Effects of Cost Containment and Price Policies on Pharmaceutical Expenditure in South Korea. International Journal of Health Policy and Management, 11(10), 2198-2207. doi: 10.34172/ijhpm.2021.135.

“A price cut may directly contribute to the reduction of pharmaceutical spending in the short run.^4,45-48 However, physicians or patients may change their behaviors in response to the price cut in the long term, yielding unexpected results in drug spending.⁴⁹ Carone et al⁶ mentioned that price cuts might achieve cost containment in the short run, but increasing the drug volume prescribed over time might counterbalance these effects. Chu et al⁷ observed physicians’ behavior in increasing prescription duration and the number of drugs per prescription compared to the reduction of drug reimbursement rates in Taiwan. Hsu et al⁸ also showed that Taiwanese physicians shifted their drug choice from targeted to non-targeted drugs after reductions in reimbursements.

“The present study provides real-world evidence of the impact of pharmaceutical cost-containment policies targeting the most frequent conditions encountered in outpatient settings. Its study population encompassed all operating clinics in the capital city of Seoul and six other metropolitan cities, in which approximately half of the Korean population resided as of February 2019. We also identified the heterogeneous response of the clinics to various pharmaceutical cost containment measures by the conditional magnitude of claims (ie, business scales).

“We assessed the medium-term effect of those policies by utilizing 10 years of claims data. Han et al⁴ similarly analyzed antibiotic prescription behavior for patients with acute upper respiratory tract infections, acute lower respiratory tract infections, and otitis media. They obtained mixed results for the Outpatient Prescription Incentive Program in October of 2010. They found that the Uniform Ceiling Prices for Generics lowered drug spending immediately through the price effect, but this effect later diminished. Han et al⁴ only observed eight months after the Uniform Ceiling Prices for Generics in April of 2012 and used a limited clinic sample. Park and Han⁵ also reported that outpatient incentive policies had a limited effect on pharmaceutical spending. Here, we shed light on the longer-term impacts of relevant policies.

“The underlying mechanism of physicians’ responses remains unidentified in the present study. Exploiting a vast amount of real-world data from all clinics assures our results’ external validity. This generated a tradeoff for aggregating the data monthly without micro-level analyses delineating at the individual claim level. One critical spill-over effect of policies to contain pharmaceutical prices would be a potential negative impact on the quality of care. A recent systematic review revealed that not embedding the pay-for-performance system with specific outcome objectives can have mixed effects on patient health outcomes.^50,51 We acknowledge that no control group exists in our research context, since Korea has a single public health insurer and all Koreans and legal residents are beneficiaries. The policies of interest impact all providers. There has been only limited empirical investigation of the impact of those policies on patient outcomes,⁴⁹ and most relevant research has focused on the significance of cost-sharing rather than policies to modulate drug costs.^52-55 Future studies must include patient health outcomes.”

“A study from Korea found that the majority of terminal cancer patients received futile intravenous nutrition during the last week of life, with discussions of palliation in only 7% of cases.¹⁵⁶“

“In conclusion, the launch of Korea’s nationwide ‘Right Decision in Cancer Care’ initiative highlights the current agenda for cancer care that should be discussed between physicians and patients, before any treatment decisions are made. Cancer survival and patient-defined quality of life should be used as one of the most important end-points to evaluate the quality of cancer care, and treatment costs should also be taken into consideration. Patients and physicians should work together to ensure high-value care is provided and that healthcare resources are used wisely. Healthcare providers and physicians need to adhere to evidence-based practices, and policy makers should establish tools capable of accurately measuring value-oriented healthcare and incentivizing high-value practices [32]. This article, as a first step in the ‘Right Decision in Cancer Care’ initiative, presents the initial five items on the agenda; however, the initiative should be expanded to provide more opportunities to correct and to prevent problems of underuse, overuse, and misuse of finite cancer care resources, and to finally improve the quality of cancer care in Korea.”

Source: Kim, J. Y., Lee, K. E., Kim, K., Lee, M. A., Yoon, W. S., Han, D. S., Ahn, S. G., & Kang, J. H. (2020). Choosing Wisely: The Korean Perspective and Launch of the ‘Right Decision in Cancer Care’ Initiative. Cancer research and treatment, 52(3), 655–660. doi.org/10.4143/crt.2020.221

Health Systems Facts is a project of the Real Reporting Foundation. We provide reliable statistics and other data from authoritative sources regarding health systems in the US and sixteen other nations.

Page last updated Jan. 5, 2023 by Doug McVay, Editor.