Contribution of Medication Expenditures to Catastrophic Health Expenditures in Iran: An Inequality Analysis

Catastrophic health expenditures (CHE) is a well-established indicator of financial risk protection. This study aimed to examine the contribution of medication expenditure to CHE and the associated socioeconomic inequalities.

Data were drawn from 6 nationally representative income and expenditure surveys covering the period 2019-2024. Using the budget share method, CHE was defined as out-of-pocket (OOP) health payments exceeding 25% of a household's total consumption expenditure. The contribution of medication expenditures to CHE was then calculated as the difference in the proportion of households experiencing CHE with and without medication payments. Socioeconomic inequalities were quantified using the Concentration Index (CI), and decomposition analysis was conducted to identify the primary drivers of overall socioeconomic inequality in the contribution of medication expenditures to CHE.

During the study period, medications represented a substantial share of household health expenditures and contributed to CHE. In 2024, OOP spending on medications accounted for 31.2% of total health expenditures, while the contribution of medication expenditures to CHE was 1.28%. The CI indicated that the contribution of medication expenditures to CHE was concentrated among poorer households. Decomposition analysis further identified medium-sized households, male-headed households, households with employed heads, insured households, and urban households as the main contributors to this socioeconomic inequality.

In Iran, OOP payments for medications constitute a substantial share of household healthcare expenditures and contribute to CHE. Because the roots of inequality extend beyond the healthcare system, addressing this issue requires a comprehensive, cross-sectoral strategy that integrates broader social and economic policies.