The Effects of Cost Containment and Price Policies on Pharmaceutical Expenditure in South Korea

Document Type : Original Article

Authors

1 Korea Institute of Public Finance, Sejong, South Korea

2 College of Pharmacy, Yonsei Institute of Pharmaceutical Research, Yonsei University, Seoul, South Korea

3 College of Pharmacy, Woosuk University, Wanju, South Korea

Abstract

Background 
Policy-makers have proposed and implemented various cost-containment policies for drug prices and quantities to regulate rising pharmaceutical spending. Our study focused on a major change in pricing policy and several incentive schemes for curbing pharmaceutical expenditure growth during the 2010s in Korea.

Methods 
We constructed the longitudinal dataset from 2008-2017 for 12 904 clinics to track the prescriber behavior before and after the implemented policies. Applying an interrupted time series model, we analyzed changes in trends in overall monthly drug expenditure and antibiotic drug expenditure per prescription for outpatient claims diagnosed with three major diseases before and after the policies’ implementation.

Results 
Significant price reductions and incentives for more efficient drug prescriptions resulted in an immediate decrease in monthly drug expenditures in clinics. However, we found attenuated effects over the long run. The topspending clinics showed the highest rate of increase in drug costs.
 
Conclusion 
Future policy interventions can maximize their effects by targeting high-spending providers.
 

Keywords


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Articles in Press, Corrected Proof
Available Online from 21 September 2021
  • Receive Date: 08 September 2020
  • Revise Date: 17 August 2021
  • Accept Date: 19 September 2021