ABSTRACT

The goal of this chapter is to give a better understanding of the wide variety of payer systems, as well as to show the role of important decision-making bodies and key budget holders in the decision-making process. The author will discuss the most important drug coverage philosophies, cost control mechanisms and decision-making processes used by payers. Payer systems are designed to achieve certain policy objectives and to provide a rational set of rules to fairly decide on pricing and coverage of a variety of drugs and medical benefits. In evaluating a payer’s preferences and actions, it is first of all important to verify the true “perspective” of the payer in terms of his or her area of responsibility. Another important consideration is the time horizon for a payer. Payers in US Managed Care will carefully consider patient plan switch behaviors in evaluating the financial return of long-term benefits, whereas a European government is more likely to accept a longer-term time horizon.