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PharmacoEconomics

, 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

Summary

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.

Keywords

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.

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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

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