Patient charges and the utilisation of NHS prescription medicines: some estimates using a cointegration procedure

Since the inception of the NHS, user charges have been present for prescription medication. However since 1968 there has been a steady increase in this charge, particularly notable during the 1980s. The main justification for user charges is their revenue raising potential, and a recent government report has backed the use of user charges for prescription drugs. Whilst there is extensive evidence of the impact of user charges on utilisation of health care in the US, few studies exist in the UK. An accurate estimation of the price elasticity of utilisation is necessary if the full consequences of user charges are to be examined. This paper uses a cointegration estimation technique to estimate the price elasticity for prescription drug utilisation in the UK.