Research Article: The effect of a change in co-payment on prescription drug demand in a National Health System: The case of 15 drug families by price elasticity of demand

Date Published: March 27, 2019

Publisher: Public Library of Science

Author(s): Cristina Hernández-Izquierdo, Beatriz González López-Valcárcel, Stephen Morris, Mariya Melnychuk, Ignacio Abásolo Alessón, Marta Pascual.


To test the heterogeneity of the effect of a change in pharmaceutical cost-sharing by therapeutic groups in a Spanish region.

Data: random sample (provided by the Canary Islands Health Service) of 40,471 people covered by the Spanish National Health System (SNHS) in the Canary Islands. The database includes individualised monthly-dispensed medications (prescribed by the SNHS) from one year before (August 2011) to one year after (June 2013) the Royal Decree Law 16/2012 (RDL 16/2012). Sample: two intervention groups (low-income pensioners and middle-income working population) and one control group (low-income working population). Empirical model: quasi-experimental difference-in-differences design to study the change in consumption (measured in number of monthly Defined Daily Dose (DDDs) per individual) among 13 therapeutic groups. The policy break indicator (three-level categorical variable) tested the existence of stockpiling between the reform’s announcement and its implementation. We ran 16 linear regression models (general, by therapeutic groups and by comorbidities) that considered whether the exclusion of some drugs from public provision impacted on consumption more than the co-payment increase.

General: Reduction (-13.04) in consumption after the reform’s implementation, which was fully compensated by a previous increase (16.60 i.e., stockpiling) among low-income pensioners. The middle-income working population maintained its trend of increasing consumption. Therapeutic groups: Reductions in consumption after the reform’s implementation among low-income pensioners in 7 of the 13 groups, which were fully compensated for by a previous increase (i.e., stockpiling) in 4 groups and partially compensated for in the remaining 3. The analysis without the excluded medicines provided fewer negative coefficients. Comorbidities: Reduction in consumption that was only slightly compensated for by a previous increase (i.e., stockpiling).

The negative impact of cost-sharing produced, among low-income pensioners, a risk of loss of adherence to treatments, which could deteriorate the health status of individuals, especially among pensioners within the most inelastic therapeutic groups (associated with chronic diseases) and patients with comorbidities (also, associated with chronic diseases). Notwithstanding the above, this risk was more related to the exclusion of some drugs from provision than to the cost-sharing increase.

Partial Text

The nature of the disease to be treated (e.g., chronic versus acute or severe versus mild) is a key factor to understand the behaviour of individuals’ pharmaceutical consumption [1]. Research has shown that patients with chronic diseases are less sensitive to drug price changes than non-chronic ones [2]. While it is true that most studies establish a general inelastic price-elasticity of drugs of around -0.2 [2–4], there is also evidence that the most inelastic drugs are those indicated for the treatment of chronic diseases with price-elasticity of approximately -0.08 [4].

There was a negative impact of the cost-sharing change on the drug consumption of low-income pensioners, as was expected [9,10]. However, as the impact of the reform on pharmaceutical consumption was small in all therapeutic groups (cf. variation rates comparison in Table 3), individuals did not seem to be very sensitive to changes in drug prices, that is to say, the price elasticity of drugs is quite low [2,3,4,5,18,19]. This means that the reform had a ‘tax collection’ profile more than a ‘moral hazard’ reduction profile. Moreover, middle-income working population maintained its increasing consumption trend. This behaviour reflects that, as the literature maintains [9,10], middle-income individuals are not affected by co-payment increases.

Our first finding is that the negative impact of the cost-sharing change on consumption among low-income pensioners is small. The results also appear to confirm that co-payments do not affect the consumption of middle-income working population. Secondly, the analysis reflects the existence of heterogeneity in the impact of the cost-sharing by therapeutic groups. In this regard, the analysis of stockpiling, a key factor in fully understanding the impact of the reform on drug consumption, revealed that the reduction in consumption was a consequence of prior stockpiling, especially, among the most inelastic therapeutic groups (related to chronic diseases). Nonetheless, the monthly follow-up analysis expanded on this information and showed that the non-recovery observed in any of the therapeutic groups in the subsequent months after the reform, might imply a risk of loss of medication adherence. We especially detected a likely risk among those individuals who were dispensed medicines from two or more therapeutic groups, which are associated with people with comorbidities. Thirdly, the exclusion of 426 drugs from public provision impacted on consumption more than the cost-sharing increase. In any case, as we did not detect a total recovery of consumption when we ran the analysis without the excluded medicines, the risk of a loss of medication adherence was present. This risk was especially marked among the most inelastic therapeutic groups (cardiovascular and anti-hypelipidemics), which are strongly associated with chronic diseases.




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