OBJECTIVES: This study aims to investigate the financial implications of medicines out of pocket (OOP) payments for Ethiopian households based on national surveys done in two time periods.

METHODS: Analysis was based on secondary data of repeated national cross-sectional household consumption and expenditure survey of 2010/11 and 2015/16. The survey included households from all Ethiopian regional states and city administrations. A “capacity to pay” method was used to measure the headcount of catastrophic health expenditure (CHE). Concentration index estimation was applied to compute the extent of economic status related to CHE inequality. Poverty headcount and poverty gap were used to estimate the impoverishment effects of OOP medicine payment. Logistic regression models were used to identify the determinants of catastrophic medicine expenditure.

RESULTS: Despite a significant decrease from their 2010/11 levels, the 2015/16 data show that OOP payments for health care services and medicine contributed to 3% and 0.8% of overall household expenditures, respectively. In 2015/16, OOP payments for health care services and medicines accounted for 8.4% and 4.8% of households' non-food expenditures, respectively. These figures show a significant increase from their 2010/11 values (p<0.001). At a threshold of 40% of non-food expenditure, the total percentage of households facing CHE dropped from 3% in 2010/11 to 0.73% in 2015/16. Similarly, catastrophic payment for medicines decreased from 1% in 2010/11 to 0.73% in 2015/16. In terms of numbers, about 406,301 households were projected to have incurred CHEs in the year 2015/16. Moreover, payments for medicines were projected to have pushed 11,132 households into poverty. Majority of the disparities were explained by economic status, place of residence, and type of health services.

CONCLUSIONS: Medicine payment covers a significant portion of health services expenditure across the surveys. The government should consider pro-poor policies that target reducing medicine prices to prevent OOP health payment induced CHE and poverty.