Exploring the effectiveness of demand-side retail pharmaceutical expenditure reforms

Michael Berger, Markus Pock, Miriam Reiss, Gerald Röhrling and Thomas Czypionka ()
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Michael Berger: Medical University of Vienna
Markus Pock: Institute for Advanced Studies
Miriam Reiss: Institute for Advanced Studies
Gerald Röhrling: Institute for Advanced Studies
Thomas Czypionka: Institute for Advanced Studies

International Journal of Health Economics and Management, 2023, vol. 23, issue 1, No 7, 149-172

Abstract: Abstract Increasing expenditures on retail pharmaceuticals bring a critical challenge to the financial stability of healthcare systems worldwide. Policy makers have reacted by introducing a range of measures to control the growth of public pharmaceutical expenditure (PPE). Using panel data on European and non-European OECD member countries from 1990 to 2015, we evaluate the effectiveness of six types of demand-side expenditure control measures including physician-level behaviour measures, system-level price-control measures and substitution measures, alongside a proxy for cost-sharing and add a new dimension to the existing empirical evidence hitherto based on national-level and meta-studies. We use the weighted-average least squares regression framework adapted for estimation with panel-corrected standard errors. Our empirical analysis suggests that direct patient cost-sharing and some—but not all—demand-side measures successfully dampened PPE growth in the past. Cost-sharing schemes stand out as a powerful mechanism to curb PPE growth, but bear a high risk of adverse effects. Other demand-side measures are more limited in effect, though may be more equitable. Due to limitations inherent in the study approach and the data, the results are only explorative.

Keywords: Public pharmaceutical expenditure; Health expenditure; Pharmaceutical policy; Panel data models; Weighted-average least squares (search for similar items in EconPapers)
JEL-codes: I18 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10754-022-09337-6

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