Determinants of out-of-pocket pharmaceutical expenditure and access to drugs in Catalonia

Abstract

This article examines the determinants of the demand for pharmaceuticals in Catalonia using the latest available official survey data, having accounted for the individual differences in cost-sharing among consumers, as well as the influence of self-medication. The article builds a model of the (household) determinants of pharmaceutical expenditure and consumption. The econometric application deals with the infrequency of purchases and the nondistinction between out-of-pocket spending and drug cost sharing. Our results suggest that income and the variables accounting for the effect of cost sharing were significantly associated with drug use but not drug expenditure. Furthermore, gender, health status and having health insurance appear to be significant predictors. Access to pharmacies increases both drug use and expenditure; self-medication also increases drug expenditure out-of-pocket. These results are relevant for the entire Spanish case where current reform proposals have recommended the introduction of income-related (rather than age-related) co-payments. The same applies to the need for controlling self-medication which results from individual behaviour of consuming medicines for minor ailments without a prescription and which can be acquired OTC and are priced cheaply.

Acknowledgements

The authors gratefully acknowledge comments and suggestions from two anonymous referees. All outstanding errors are the authors’ own. Joan Costa-Font is grateful to the project SEJ2005-06270.

Notes

¹ Average (per pack) prices were €6.07 for prescription drugs and €2.05 for OTCs in 2001.

² It is has also been estimated that the 6% of prescription drugs are dispensed without a prescription.

³ Drugs are products subject to substantial product and price differentiation; therefore it is impossible to estimate adequate household specific price index.

⁴ Examining elasticities is important because I might be informative on the effects of subsidies on drugs. Indeed, subsidising more those commodities whose consumption tends to fall with income. Thus, income elasticity provides come information on whether or not to subsidize certain goods.