The effect of patient charges on the utilisation of prescription medicines

This study is a time-series regression analysis of National Health Service (NHS) prescription drug utilisation. The monthly volume of items dispensed with and without charge in England (1969-1986) form the dependent variables for model estimation. The main finding is that, for items that incur a charge, increases in the real value of the prescription charge are associated with reductions in prescription drug utilisation. The charge-volume elasticity (1969-1986) is estimated at -0.33, rising to -0.64 in the later sub-period (1978-1986). OTC products display a positive cross-price elasticity (+0.22) with chargeable items, but they are less clearly substitutes for prescriptions exempt from charge. One of the main predictors for exempt prescriptions is the number of elderly in the population. The study concludes that the evaluation of the prescription charge policy requires more detailed study of both the incidence of the charge effect and the possible costs and health consequences of reduced utilisation due to the charge.