Do indicators for the proportion of pharmaceutical spending alleviate the burden of medical expenditure? Evidence from provincial panel-data in China, 2010-2019

ABSTRACT

Background

The current study aims to empirically evaluate the direct relationship between the proportion of pharmaceutical spending and total medical expenditure in China in a recent decade period.

Methods

A two-way fixed-effect model was established to estimate the relationship between the proportion of pharmaceutical spending and total medical expenditure using the balanced panel data for thirty provincial-level administrative regions in mainland China from 2010 to 2019.

Results

The proportion of pharmaceutical spending was significantly positively related to inpatient and outpatient expenditure, with coefficients of 0.30 (p = 0.014) and 0.58 (p = 0.002), respectively. This positive correlation was not significant in the eastern regions, likely due to the unexpected supply-side coping behaviors brought about by the compulsory control of the proportion of pharmaceutical spending. We investigated the improvement of service efficiency could significantly alleviate the burden of medical expenses.

Conclusion

Our research provided empirical evidence for the necessity of using the proportion of pharmaceutical spending as a cost control indicator and showed the factors that may affect the amount of medical expenditure, emphasizing the significance of improving the efficiency of resource utilization to compensate for the unintended behaviors and effects caused by single index assessment.

KEYWORDS:

• Pharmaceutical spending
• inpatient expenditure
• outpatient expenditure
• cost control
• service efficiency

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.

Reviewers disclosure

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

Author contributions

TY and WD wrote the first draft of the manuscript with contributions from all authors. WD, WZ and JL gathered the data and reviewed the statistical analysis applied. JD was the study guarantor and revised the manuscript text critically. All authors reviewed the manuscript and approved the final version submitted for publication. All authors have agreed to be personally accountable for the author’s own contributions and to ensure that questions related to the accuracy or integrity of any part of the work, even ones in which the author was not personally involved, are appropriately investigated, resolved, and the resolution documented in the literature.

Data availability

The datasets generated during the current study are available from the corresponding author on reasonable request.

Supplementary materials

Supplemental data for this article can be accessed here.

Additional information

Funding

This study was supported by National Natural Science Foundation of China (grant no. 71974011, 71804009, 71603018, 71972012).