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The influence of prescription drug insurance on psychotropic and non-psychotropic drug utilization in Canada


  • Sarma, Sisira
  • Basu, Kisalaya
  • Gupta, Anil


Using 2002 Canadian Community Health Survey data, this paper examines the effect of public and private prescription drug insurance on the utilization of psychotropic and non-psychotropic drugs. It is found that prescription drug utilization is characterized by two stochastic regimes requiring use of latent class modelling framework. In many instances, results differ for the classes of high and low users of prescription drugs. After accounting for the unobserved individual heterogeneity and a number of socio-demographic factors, health status, and province fixed effects, we find that having prescription drug insurance (public or private) increases the expected number of non-psychotropic medications for both low and high users. Public insurance affects psychotropic drug utilization positively for the low-user group only. The statistical insignificance of insurance for the high-user psychotropic drugs or lower magnitude of insurance coefficients on high-user non-psychotropic drugs seems to stem from high inelastic demand for prescription drugs in the concerned groups. In addition, we find that age, self-reported health status, and long-term mental and physical health problem diagnosed by a health professional are important determinants of prescription drug utilization for both classes of users.

Suggested Citation

  • Sarma, Sisira & Basu, Kisalaya & Gupta, Anil, 2007. "The influence of prescription drug insurance on psychotropic and non-psychotropic drug utilization in Canada," Social Science & Medicine, Elsevier, vol. 65(12), pages 2553-2565, December.
  • Handle: RePEc:eee:socmed:v:65:y:2007:i:12:p:2553-2565

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    References listed on IDEAS

    1. Deb, Partha & Trivedi, Pravin K., 2002. "The structure of demand for health care: latent class versus two-part models," Journal of Health Economics, Elsevier, vol. 21(4), pages 601-625, July.
    2. Lundberg, Lena & Johannesson, Magnus & Isacson, Dag G. L. & Borgquist, Lars, 1998. "Effects of user charges on the use of prescription medicines in different socio-economic groups," Health Policy, Elsevier, vol. 44(2), pages 123-134, May.
    3. Deb, Partha & Trivedi, Pravin K, 1997. "Demand for Medical Care by the Elderly: A Finite Mixture Approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(3), pages 313-336, May-June.
    4. Kapur, Vishnu & Basu, Kisalaya, 2005. "Drug coverage in Canada: who is at risk?," Health Policy, Elsevier, vol. 71(2), pages 181-193, February.
    5. Zweifel, Peter & Manning, Willard G., 2000. "Moral hazard and consumer incentives in health care," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 8, pages 409-459 Elsevier.
    6. Sisira Sarma & Wayne Simpson, 2006. "A microeconometric analysis of Canadian health care utilization," Health Economics, John Wiley & Sons, Ltd., vol. 15(3), pages 219-239.
    7. Leibowitz, Arleen & Manning, Willard G. & Newhouse, Joseph P., 1985. "The demand for prescription drugs as a function of cost-sharing," Social Science & Medicine, Elsevier, vol. 21(10), pages 1063-1069, January.
    8. St├ęphane Jacobzone, 2000. "Pharmaceutical Policies in OECD Countries: Reconciling Social and Industrial Goals," OECD Labour Market and Social Policy Occasional Papers 40, OECD Publishing.
    9. repec:aph:ajpbhl:2004:94:10:1782-1787_2 is not listed on IDEAS
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    Cited by:

    1. Vicky Barham & Hana Bataineh & Rose Anne Devlin, 2017. "Unmet Health Care and Health Care Utilization," Working Papers 1716E, University of Ottawa, Department of Economics.
    2. Devlin, Rose Anne & Sarma, Sisira & Zhang, Qi, 2011. "The role of supplemental coverage in a universal health insurance system: Some Canadian evidence," Health Policy, Elsevier, vol. 100(1), pages 81-90, April.
    3. Sunday Azagba & Mesbah Sharaf, 2011. "The effect of job stress on smoking and alcohol consumption," Health Economics Review, Springer, vol. 1(1), pages 1-14, December.


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