This chapter focuses on opportunities to spend less on pharmaceuticals and other medical supplies. It starts with a discussion of perhaps the most intuitive case of waste, which occurs when prescribed pharmaceuticals (and other medical goods) are discarded unused. Next, the chapter proceeds to the foregone opportunities associated with not substituting originator drugs with cheaper therapeutic alternatives, such as generics or biosimilars. The final issue explored is whether lower prices for pharmaceuticals and other medical supplies could be obtained with more efficient procurement processes.

This chapter analyses a type of operational waste that consists of using more expensive than necessary inputs. The focus is on three prominent examples of wasteful use of hospital care: unnecessary hospital attendances; inefficient processes within hospitals; and delays in discharging patients. The chapter examines the extent and main drivers of unnecessary hospital use in OECD countries, and assesses whether certain services can be safely shifted from inpatient hospital care to less intensive care settings. Associated policy reforms are then analysed in terms of their effectiveness and ease of implementation, drawing from selected country experiences. Many of these policies are based on organisational reforms that: ensure that primary and community care options are available in the right place at the right time; offer better primary care services within hospitals; and improve care co-ordination. The policy potential of carefully designed financial incentives and non-financial policy levers is also discussed.