Price cuts and drug spending in South Korea : the case of antihyperlipidemic agents

Kwon, H.-Y. and Hong, Ji-Min and Godman, Brian and Yang, B.-M. (2013) Price cuts and drug spending in South Korea : the case of antihyperlipidemic agents. Health Policy, 112 (3). pp. 217-226. ISSN 0168-8510

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Abstract

Objective: To identify the effect of price control policies on drug expenditure in South Korea. Methods: We retrospectively examined the effects of price-reduction policies on drug expenditures, in particular regarding anti-hyperlipidemic drugs. The National Health Insurance claims data for a 60-month period between 2006 and 2010 were analysed. A segmented regression analysis was conducted with three intervention variables: July 2008, April 2009, and January 2010. Results: Despite three rounds of price cuts, monthly drug expenditures increased by KRW 599.67 million (USD 523,726) after the third intervention (p= 0.0781). The trend in volume increased consistently, but not significantly. The unit prices showed a steady downward trend over time, but rebounded after the third price cut. The number of patients with hyperlipidemia more than doubled to 3729 (p= 0.0801) per month after the entry of generics for atorvastatin in July 2008. Conclusion: Extensive price controls did not effectively suppress the growth of pharmaceutical expenditures. The increased number of patients, attributable to the newly launched generic drug atorvastatin, and the increased use of expensive drugs were major factors affecting the increase in drug spending. Policies that regulate both drug prices and utilisation, and that reduce financial burdens via enhanced use of generics need to be introduced.