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Exploring the effectiveness of demand-side retail pharmaceutical expenditure reforms

Author

Listed:
  • Michael Berger

    (Medical University of Vienna
    Institute for Advanced Studies)

  • Markus Pock

    (Institute for Advanced Studies)

  • Miriam Reiss

    (Institute for Advanced Studies)

  • Gerald Röhrling

    (Institute for Advanced Studies)

  • Thomas Czypionka

    (Institute for Advanced Studies
    London School of Economics and Political Science)

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.

Suggested Citation

  • Michael Berger & Markus Pock & Miriam Reiss & Gerald Röhrling & Thomas Czypionka, 2023. "Exploring the effectiveness of demand-side retail pharmaceutical expenditure reforms," International Journal of Health Economics and Management, Springer, vol. 23(1), pages 149-172, March.
    • Handle: RePEc:kap:ijhcfe:v:23:y:2023:i:1:d:10.1007_s10754-022-09337-6
    DOI: 10.1007/s10754-022-09337-6
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    More about this item

    Keywords

    Public pharmaceutical expenditure; Health expenditure; Pharmaceutical policy; Panel data models; Weighted-average least squares;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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