Drug Expenditure and New Drug Introductions
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.
KeywordsPrice Index Budesonide Peptic Ulcer Disease Relative Price Drug Expenditure
Unable to display preview. Download preview PDF.
- Drummond MF, Stoddart GL, Torrance GW. Methods for the economic evaluation of health care programmes, Oxford Medical Publications, Oxford, 1987Google Scholar
- EFPIA in figures: The Pharmaceutical Industry in Europe 1989–1990, European Federation of Pharmaceutical industries’ Associations, 1991Google Scholar
- EFPIA in figures: The Pharmaceutical Industry in Europe 1990–1991, EFPIA, 1992Google Scholar
- Jönsson, B. Cost benefit analysis in public health and medical care. Liber, Lund, 1976Google Scholar
- Jönsson B, The pharmaceutical market. In Bourdet (Ed.) Internationalization, market power and consumer welfare, Routledge, London, 1992Google Scholar
- National Corporation of Swedish Pharmacies (NCSP), Svensk Läkemedelsstatistik, Stockholm, 1989Google Scholar
- National Corporation of Swedish Pharmacies (NCSP), Svensk Läkemedelsstatistik, Stockholm. 1992Google Scholar
- Ståhl I, Can health care costs be controlled? A study in production and development in health care, Dialogos, Lund, 1986Google Scholar
- Zöllner, H. Measures to control the costs of pharmaceutical prescriptions in Europe, WHO/EURO internal draft document. 1984Google Scholar