Why did drug spending increase during the 1990s? A decomposition based on Swedish data

Area of Science:

• Health Economics
• Pharmaceutical Policy
• Drug Utilization Research

Background:

• Drug spending in Sweden between 1990 and 2000 was analyzed in a previous study covering 1990-1995.
• This paper extends the analysis by an additional five years (1995-2000).

Purpose of the Study:

• To decompose changes in drug spending in Sweden from 1990 to 2000.
• To identify the key drivers of increased pharmaceutical expenditure over the decade.

Main Methods:

• Drug spending data from Apoteket AB (The National Corporation of Swedish Pharmacies) were utilized.
• Spending was decomposed into components of price, quantity, and treatment pattern changes (residual).
• Analysis included aggregate spending and spending by Anatomical Therapeutic Chemical (ATC) classification system groups.

Main Results:

• Real drug spending increased by 119% between 1990 and 2000.
• The shift to more innovative and expensive drug therapies (residual) was the primary cost driver, accounting for a 67% increase.
• Increased medication intensity (defined daily doses per patient) drove a 41% rise in drug quantity consumed, while real prices decreased.

Conclusions:

• The primary driver of escalating drug costs in Sweden (1990-2000) was the transition to newer, more expensive therapies.
• Economic evaluations of novel, costly drugs are crucial to assess the societal benefits of therapeutic substitutions.