, Volume 4, Issue 3, pp 215–225 | Cite as

Drug Expenditure and New Drug Introductions

The Swedish Experience
  • Ulf-G Gerdtham
  • Magnus Johannesson
  • Bengt Jönsson
Original Research Article


This article measures the impact of the switch to new and more expensive drugs on the aggregate drug expenditure (both prescription and nonprescription) in Sweden during the period 1974 to 1991, and also on the disaggregated expenditure for 3 medical areas: asthma, hypertension and peptic ulcer disease. During the period studied, nominal drug expenditure increased 6-fold. The retail price index of drugs and the number of prescribed drugs accounted for 51.6 and 5.8% of this increase, respectively. The remaining residual amount accounted for 42.6%. Since the price index of drugs increased more slowly than the overall net price index of goods and services, the relative price of drugs decreased dramatically by about 30%. This means that increases in prices of drugs cannot explain the increase in real inflation-adjusted drug expenditure. We also show that the residual increase can be partly explained by the introduction of new and more expensive drugs. It is therefore argued that economic evaluations which compare the extra costs induced by new drugs with the extra benefits should be undertaken to guide decisions about the prescription of new and more expensive drugs.


Price Index Budesonide Peptic Ulcer Disease Relative Price Drug Expenditure 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Ädelroth E, Thompson S. Advantages of high-dose inhaled budesonide. Lancet 2: 476, 1988CrossRefGoogle Scholar
  2. Ädelroth E, Thompson S. Högdosinhalationssteroider vid astma: analys av kostnader och vårdutnyttjande. Läkartidningen 81: 4285–4288, 1984PubMedGoogle Scholar
  3. Drummond MF, Stoddart GL, Torrance GW. Methods for the economic evaluation of health care programmes, Oxford Medical Publications, Oxford, 1987Google Scholar
  4. EFPIA in figures: The Pharmaceutical Industry in Europe 1989–1990, European Federation of Pharmaceutical industries’ Associations, 1991Google Scholar
  5. EFPIA in figures: The Pharmaceutical Industry in Europe 1990–1991, EFPIA, 1992Google Scholar
  6. Freund DA, Dittus RS. Principles of pharmacoeconomic analysis of drug therapy. PharmacoEconomics 1: 20–31, 1992PubMedCrossRefGoogle Scholar
  7. Geweke J, Weisbrod BA. Expenditure effects of technological change: the case of a new drug. Evaluation Review 8: 74–92, 1984CrossRefGoogle Scholar
  8. Johannesson M, Borgquist L, Jönsson B. The costs of treating hypertension: an empirical investigation in primary health care. Scandinavian Journal or Primary Health Care 9: 155–160, 1991CrossRefGoogle Scholar
  9. Johannesson M, Jönsson B. Economic evaluation in health care: is there a role for cost-benefit analysis? Health Policy 17: 1–23, 1991PubMedCrossRefGoogle Scholar
  10. Johannesson M, Johansson P-O, Jönsson S. Economic evaluation of drug therapy; a review of the contingent valuation method. PharmacoEconomics 1: 325–337, 1992PubMedCrossRefGoogle Scholar
  11. Johannesson M, Wikstrand J, Jönsson B, Berglund G, Tuomilehto J. Cost-effectiveness of antihypertensive treatment: metoprolol versus thiazide diuretics. PharmacoEconomics 3: 36–44, 1993PubMedCrossRefGoogle Scholar
  12. Johansson P-O. An introduction to modern welfare economics, Cambridge University Press, Cambridge, 1991CrossRefGoogle Scholar
  13. Jönsson, B. Cost benefit analysis in public health and medical care. Liber, Lund, 1976Google Scholar
  14. Jönsson B, The pharmaceutical market. In Bourdet (Ed.) Internationalization, market power and consumer welfare, Routledge, London, 1992Google Scholar
  15. Jönsson B, Carlsson P. The effects of cimetidine on the cost of ulcer disease in Sweden. Social Science and Medicine 33: 275–282, 1991PubMedCrossRefGoogle Scholar
  16. National Corporation of Swedish Pharmacies (NCSP), Svensk Läkemedelsstatistik, Stockholm, 1989Google Scholar
  17. National Corporation of Swedish Pharmacies (NCSP), Svensk Läkemedelsstatistik, Stockholm. 1992Google Scholar
  18. Ståhl I, Can health care costs be controlled? A study in production and development in health care, Dialogos, Lund, 1986Google Scholar
  19. Weisbrod BA. A guide to benefit-cost analysis, as seen through a controlled experiment in treating the mentally ill. Journal of Health Politics, Policy and Law 7: 805–845, 1983CrossRefGoogle Scholar
  20. Wikstrand J, Warnold I, Tuomilehto J, Olsson G, Elmfeldt D, et al. Metoprolol versus thiazide diuretics in hypertension: morbidity results from the MAPHY study. Hypertension 17: 579–588, 1991PubMedCrossRefGoogle Scholar
  21. Zöllner, H. Measures to control the costs of pharmaceutical prescriptions in Europe, WHO/EURO internal draft document. 1984Google Scholar

Copyright information

© Adis International Limited 1993

Authors and Affiliations

  • Ulf-G Gerdtham
    • 1
  • Magnus Johannesson
    • 1
  • Bengt Jönsson
    • 1
  1. 1.Centre for Health Economics, Stockholm School of EconomicsStockholmSweden

Personalised recommendations