Background: Pharmaceutical expenditures (PE) are increasing worldwide, raising concerns about sustainability. However, the current price index provides an incomplete picture of this trend due to the rapid introduction of new drugs on the market.
Objective: The aim of this study is to decompose PE into their components and investigate the development in Sweden from 1990 to 2022.
Methods: The PE index was broken down into separate indices for price, quantity, and a residual. The residual reflects changes in expenditure driven by shifts in drug treatment patterns.
Results: PE increased by 227% during the study period. The decomposition showed that this increase was mainly driven by the residual (215%). Drug quantity increased by 105%, while the relative prices decreased by 50%. When dividing the whole study period into three 11-year-subperiods, the increase in real drug expenditure, drug quantity, and the residual was the highest from 1990 to 2000.
Conclusions: The finding that the residual is the main driver indicates that the increase in PE is due to the introduction of and shift to more expensive pharmaceutical treatments, while existing treatments tend to become cheaper. Further research is needed to determine whether newer, more expensive drugs are indeed worth the extra cost.
Keywords: Pharmaceutical expenditure; expenditure decomposition/decomposition analysis; healthcare spending trends; pharmaceutical costs; pharmacoeconomics.
The amount of money Sweden is spending on pharmaceuticals is continuously rising. Spending more on drugs is not necessarily a bad thing, if the benefits (e.g. better health, higher economic growth by fostering a more productive workforce) outweigh the costs. However, during the past 15 years, pharmaceutical expenditure has risen more rapidly than Sweden’s Gross National Income (the total amount of money earned by a country’s people and businesses). This might indicate that drug spending is becoming too expensive to be affordable.This study investigated how drug spending has changed in Sweden between 1990 and 2022. Drug spending more than doubled between 1990 and 2022 because treatment patterns changed from less expensive to more expensive drugs, meaning more expensive drugs were sold because they were more often prescribed/administered.More research is necessary to investigate whether the benefits (e.g. better health) truly outweigh the costs (i.e. increased drug spending).