Estimating the effects of health service charges: evidence on the utilisation of prescriptions

The effects of regular and frequent increases in NHS patient charges on patient utilisation and average net ingredient costs of prescription items are analysed using data on NHS prescribed drugs in England for the period 1979-1985. Separate equations are estimated for non-exempt and exempt adult non-elderly patient groups. The estimates suggest that the prescription charge policy has led to a significant reduction in utilisation during a period when the underlying trend for prescription utilisation was increasing. While the policy has generated an increase in available resources, by far the greater proportion of these resource consequences has arisen from the reduction in service use, the opportunity costs of which cannot be estimated from available data. However, there is no a priori reason to believe that deterred or delayed utilisation is confined to the non-exempt population and is the result of frivolous prescribing by general practitioners. Increasing prescription charges may therefore be reducing as opposed to enhancing the efficiency of use of primary care resources. Alternative policy options are considered for promotion greater efficiency in resource use in primary care provision.