Medicine share of healthcare costs rising
Organisation for Economic Co-operation and Development has
increased by a third in real terms since 1998, reaching more than
$450 billion (€370bn) in 2003, according to new data released by
the OECD.
The data suggest that spending on medicines as a proportion of total health costs is increasing in many OECD countries, something the pharmaceutical industry has long argued is not the case. In fact, says the OECD, growth in drug spending has outpaced total health expenditure over the past five years in most OECD countries, growing more than twice as fast as total health expenditure in the US and Australia between 1998 and 2003. The rate of growth was more moderate in Japan, Italy and Switzerland.
Spending on drugs represented, on average, around 18 per cent of total health spending in OECD countries in 2003. The share ranged from highs of almost 30 per cent or more in the Slovak Republic, Korea and Hungary to lows of around 10 per cent in Denmark and Norway.
In 2003, total drug expenditure per person was highest in the US at more than $700 per person, followed by France at just over $600, and Canada and Italy (about $500). The lowest spending of just over $100 was in Mexico and Turkey.
Variations in drug spending across countries reflect differences in prices and consumption, as well as the pace of introduction of new and often more expensive drugs. Difference in income levels across countries is also a significant factor affecting spending on pharmaceuticals.
Around 60 per cent of drug spending is publicly financed on average across OECD countries, with the remainder paid by private sources, mainly out-of-pocket payments and private health insurance. By comparison, almost three-quarters of total health spending is funded through public sources.
Most countries have seen the public share of pharmaceutical spending increase in recent years, including in the US, although at around 20 per cent in 2003, it is still the second lowest public share among OECD countries.
Significant cross-country variations in spending levels exist also in terms of total health spending. In 2003, the US spent $5,635 per person on health, more than twice the OECD average and around 10 times more than the lowest-spending countries, Mexico and Turkey.
