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Drug Expenditure and New Drug Introductions : The Swedish Experience

Gerdtham, Ulf G. LU ; Johannesson, Magnus and Jönsson, Bengt (1993) In PharmacoEconomics 4(3). p.215-225
Abstract

This article measures the impact of the switch to new and more expensive drugs on the aggregate drug expenditure (both prescription and nonprescription) in Sweden during the period 1974 to 1991, and also on the disaggregated expenditure for 3 medical areas: asthma, hypertension and peptic ulcer disease. During the period studied, nominal drug expenditure increased 6-fold. The retail price index of drugs and the number of prescribed drugs accounted for 51.6 and 5.8% of this increase, respectively. The remaining residual amount accounted for 42.6%. Since the price index of drugs increased more slowly than the overall net price index of goods and services, the relative price of drugs decreased dramatically by about 30%. This means that... (More)

This article measures the impact of the switch to new and more expensive drugs on the aggregate drug expenditure (both prescription and nonprescription) in Sweden during the period 1974 to 1991, and also on the disaggregated expenditure for 3 medical areas: asthma, hypertension and peptic ulcer disease. During the period studied, nominal drug expenditure increased 6-fold. The retail price index of drugs and the number of prescribed drugs accounted for 51.6 and 5.8% of this increase, respectively. The remaining residual amount accounted for 42.6%. Since the price index of drugs increased more slowly than the overall net price index of goods and services, the relative price of drugs decreased dramatically by about 30%. This means that increases in prices of drugs cannot explain the increase in real inflation-adjusted drug expenditure. We also show that the residual increase can be partly explained by the introduction of new and more expensive drugs. It is therefore argued that economic evaluations which compare the extra costs induced by new drugs with the extra benefits should be undertaken to guide decisions about the prescription of new and more expensive drugs.

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author
publishing date
type
Contribution to journal
publication status
published
subject
in
PharmacoEconomics
volume
4
issue
3
pages
11 pages
publisher
Adis International
external identifiers
  • scopus:0027662138
ISSN
1170-7690
DOI
10.2165/00019053-199304030-00006
language
English
LU publication?
no
id
63c07ad8-dd96-4af9-9acb-f62964d55e9d
date added to LUP
2018-10-09 12:39:07
date last changed
2018-10-24 09:08:33
@article{63c07ad8-dd96-4af9-9acb-f62964d55e9d,
  abstract     = {<p>This article measures the impact of the switch to new and more expensive drugs on the aggregate drug expenditure (both prescription and nonprescription) in Sweden during the period 1974 to 1991, and also on the disaggregated expenditure for 3 medical areas: asthma, hypertension and peptic ulcer disease. During the period studied, nominal drug expenditure increased 6-fold. The retail price index of drugs and the number of prescribed drugs accounted for 51.6 and 5.8% of this increase, respectively. The remaining residual amount accounted for 42.6%. Since the price index of drugs increased more slowly than the overall net price index of goods and services, the relative price of drugs decreased dramatically by about 30%. This means that increases in prices of drugs cannot explain the increase in real inflation-adjusted drug expenditure. We also show that the residual increase can be partly explained by the introduction of new and more expensive drugs. It is therefore argued that economic evaluations which compare the extra costs induced by new drugs with the extra benefits should be undertaken to guide decisions about the prescription of new and more expensive drugs.</p>},
  author       = {Gerdtham, Ulf G. and Johannesson, Magnus and Jönsson, Bengt},
  issn         = {1170-7690},
  language     = {eng},
  month        = {01},
  number       = {3},
  pages        = {215--225},
  publisher    = {Adis International},
  series       = {PharmacoEconomics},
  title        = {Drug Expenditure and New Drug Introductions : The Swedish Experience},
  url          = {http://dx.doi.org/10.2165/00019053-199304030-00006},
  volume       = {4},
  year         = {1993},
}