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Prescription Drug Expenditures in the United States: The Effects of Obesity, Demographics, and New Pharmaceutical Products

Listed author(s):
  • Donald Vandegrift


    (The College of New Jersey)

  • Anusua Datta


    (School of Business Administration, Philadelphia University)

During the period 1990–1998, real per capita expenditures on prescription drugs in the United States increased by 84% (1996 dollars, GDP deflator). This paper examines the factors driving prescription drug expenditures in the United States and provides some quantitative measures. Panel data from all 50 states for 1990–1998 are employed. In addition to an aging population, other important determinants of rising prescription drug expenditures include changes in income, obesity, and new drug approvals. Overall, the estimates suggest that about 8% of the increase in spending on prescription drugs during 1990–1998 can be explained by the increased prevalence of obesity. Rising real incomes account for about 55% of the increase. Increases in the percentage of the population over 65 years of age and new drug approvals exert a significant positive effect on per capita prescription drug expenditures. Finally, increases in the unemployment rate exert a significantly negative effect on per capita prescription drug expenditures.

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Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 73 (2006)
Issue (Month): 2 (October)
Pages: 515-529

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Handle: RePEc:sej:ancoec:v:73:2:y:2006:p:515-529
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