The Effect of Changes in Treatment Patterns on Drug Expenditure

This paper investigates the effects of changes in drug therapy on drug expenditure in Sweden between 1990 and 1995. Analyses have been carried out for both the aggregate drug expenditure and for drug expenditure according to the main groups of the Anatomical Therapeutic Chemical (ATC) classification system. Changes in expenditure can be divided into 3 components: the price of drugs, the quantity of drugs consumed and a residual. The size of the residual is a measure of the effect of changes in drug treatment patterns on drug expenditure. The aggregate real drug expenditure increased by 50% between 1990 and 1995. The relative retail price index of drugs decreased by 9% and the quantity index measured in terms of defined daily doses increased by 27%. The remaining residual increased by 30%. This implies that, if the residual had been unchanged during the study period, the aggregate expenditure would have increased by only 15%. The results also show that the size of the residual varies substantially across different ATC groups. The increase in the residual was largest for drugs that affect the nervous system (ATC group N); the residual increased by 86%. From the observed changes in residual values, it can be concluded that the underlying factor responsible for the increase in drug expenditure in Sweden is changes in drug therapy from less expensive to more expensive drugs.