Out-of-pocket expenditures for pharmaceuticals: lessons from the Austrian household budget survey

Paying pharmaceuticals out of pocket is an important source of financing pharmaceutical consumption. Only limited empirical knowledge is available on the determinants of these expenditures.

In this article we analyze which characteristics of private households influence out-of-pocket pharmaceutical expenditure (OOPPE) in Austria.

We use cross-sectional information on OOPPE and household characteristics provided by the Austrian household budget survey 2009/10. We split pharmaceutical expenditures into the two components prescription fees and over-the-counter (OTC) expenditures. To adjust for the specific characteristics of the data, we compare different econometric approaches: a two-part model, hurdle model, generalized linear model and zero-inflated negative binomial regression model.

The finally selected econometric approaches give a quite consistent picture. The probability of expenditures of both types is strongly influenced by the household structure. It increases with age, doctoral visits and the presence of a female householder. The education level and income only increase the probability of OTC pharmaceuticals. The level of OTC expenditures remains widely unexplained while the household structure and age influence the expenditures for prescription fees. Insurance characteristics of private households, either private or public, play a minor role in explaining the expenditure levels in all specifications. This refers to a homogeneous and comprehensive provision of pharmaceuticals in the public part of the Austrian health care system.

The article gives useful insights into the determinants of pharmaceutical expenditures of private households and supplements the previous research that focuses on the individual level.