Pharmaceutical expenditure during the financial crisis: a decomposition analysis

Abstract Objectives The pharmaceutical sector is extremely important as it is one of the cost drivers in the wider health sector. The scope of this paper is to explore the drivers of pharmaceutical expenditure in Greece by decomposing pharmaceutical spending into the impact of prices, volume, and substitution effects. Methods We use a statistical approach to decompose the growth of pharmaceutical expenditure during 2009–2019 into three elements: (i) the substitution effect; (ii) the price effect; and (iii) the consumption effect. Key findings Pharmaceutical expenditure decreased by 37.81% and the volume of medicines increased by 4.51%. Prices decreased by 18% and the therapeutic mix index decreased by 27.43%, indicating that—on average—Greece experienced a switch to lower-priced medicines. This was enhanced by electronic prescribing, guidelines, monitoring of prescribing behaviour, and generic substitution. Conclusion Decomposition analysis can provide important information on the driving forces shaping the trend in pharmaceutical expenditure. To take full advantage of its potential, detailed data on consumption and expenditure need to be available to the research community.