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The impotence of price controls: Failed attempts to constrain pharmaceutical expenditures in Greece

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  • Lambrelli, Dimitra
  • O'Donnell, Owen

Abstract

Background: While the prices of pharmaceuticals are relatively low in Greece, expenditure on them is growing more rapidly than almost anywhere else in the European Union. Objective: To describe and explain the rise in drug expenditures through decomposition of the increase into the contribution of changes in prices, in volumes and a product-mix effect. Methods: The decomposition of the growth in pharmaceutical expenditures in Greece over the period 1991-2006 was conducted using data from the largest social insurance fund (IKA) that covers more than 50% of the population. Results: Real drug spending increased by 285%, despite a 58% decrease in the relative price of pharmaceuticals. The increase in expenditure is mainly attributable to a switch to more innovative, but more expensive, pharmaceuticals, indicated by a product-mix residual of 493% in the decomposition. A rising volume of drugs also plays a role, and this is due to an increase in the number of prescriptions issued per doctor visit, rather than an increase in the number of visits or the population size. Conclusions: Rising pharmaceutical expenditures are strongly determined by physicians' prescribing behaviour, which is not subject to any monitoring and for which there are no incentives to be cost conscious.

Suggested Citation

  • Lambrelli, Dimitra & O'Donnell, Owen, 2011. "The impotence of price controls: Failed attempts to constrain pharmaceutical expenditures in Greece," Health Policy, Elsevier, vol. 101(2), pages 162-171, July.
  • Handle: RePEc:eee:hepoli:v:101:y:2011:i:2:p:162-171
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    References listed on IDEAS

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    Cited by:

    1. Kazanis, Ilias, 2013. "Reforming the Greek health system: A role for non-medical, clinical bioscientists," Health Policy, Elsevier, vol. 109(1), pages 46-51.
    2. Vogler, Sabine & Zimmermann, Nina & de Joncheere, Kees, 2016. "Policy interventions related to medicines: Survey of measures taken in European countries during 2010–2015," Health Policy, Elsevier, vol. 120(12), pages 1363-1377.
    3. Gorecki, Paul K. & Nolan, Anne & Brick, Aoife & Lyons, Seán, 2012. "Pharmaceuticals Delivery in Ireland. Getting a Bigger Bang for the Buck," Research Series, Economic and Social Research Institute (ESRI), number RS24, January.

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