Bitter pill

OECD Observer

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More new drugs, and with a higher price tag, have pushed pharmaceutical expenditure up in OECD countries in the past decade. The higher cost of drugs has increased the share of the total health budget devoted to pharmaceuticals in most OECD countries, the latest edition of the OECD’s Health at a Glance shows.

But Japan, Iceland, Greece, Luxembourg and Ireland have bucked the trend, with spending on prescription drugs and over-the-counter medicine shrinking as a share of total health spending between 1990 and 2001.

Generally, pharmaceuticals account for a greater share of health expenditure in low income OECD countries, partly because they carry international market prices whereas other elements of the health bill, such as wages for medical staff, are determined more locally. The Slovak Republic and Hungary devoted the largest share of health spending to pharmaceuticals among OECD countries in 2001, at more than 30%. But countries with similar total health spending per capita can still differ widely in how much of that money is spent on drugs. Denmark and France have roughly the same health spending per capita, but Denmark is the sole OECD country with pharmaceutical spending below 10% of the total, at 8.9%, while in France pharmaceuticals account for 21%.

Per person, spending increases were even sharper. Australia and Sweden doubled their pharmaceutical expenditure per person between 1990 and 2001 and US pharmaceutical spending rose by 90%. US spending per head on prescription drugs and over-the-counter medicines in 2001 came to US$605, almost double the OECD average of US$340 and almost four times the Mexico figure of US$152.

©OECD Observer No 240/241, December 2003

Economic data

GDP growth: -9.8% Q2/Q1 2020 2020
Consumer price inflation: 1.3% Sep 2020 annual
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Unemployment: 7.3% Sep 2020
Last update: 10 Nov 2020

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