Pharmaceutical expenditure and total health-care expenditure in OECD countries and China: bidirectional Granger causality on the basis of health level

ABSTRACT

Background: Previous studies have ignored the bidirectional causality and the heterogeneity of health level. This study explored the bidirectional causality between pharmaceutical expenditure (PE) and total health-care expenditure (Total HCE) considering the health level for effective health investment and national health improvement.

Methods: Based on the panel data on PE and Total HCE in 32 OECD countries and China, the Granger causality test was applied. Countries were divided into low- and high-health-level (LH and HH) groups according to their life expectancies.

Results: A 1% increase in the growth rate of per capita PE boosted a 0.11% increase in that of per capita Total HCE of the following year in HH group, whereas no such causality existed in LH group. A 1% increase in the growth rate of per capita Total HCE boosted a 0.46% increase in that of the per capita PE of the following year in LH group, whereas no such causality existed in HH group.

Conclusion: High-health-level countries should continue to increase the health investment by promoting rational PE growth such as expanding insurance coverage for innovative medicine for health improvement. Low-health-level countries should take optimizing policy to increase health investment in pharmaceutical for medicine accessibility and national health.

KEYWORDS:

• Total health-care expenditure
• pharmaceutical expenditure
• life expectancy
• Granger causality test
• OECD
• China

Declaration of interest

The authors have no relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript. This includes employment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending, or royalties.

Reviewer disclosures

Peer reviewers on this manuscript have no relevant financial or other relationships to disclose.

Additional information

Funding

The study was funded by the National Natural Science Foundation of China (Grant No. 71774059) and the National Social Science Fund of China (Major Program, Grant No. 15ZDC037).