Pharmaceutical expenditure is determined by both price and volume. Volume control is important despite that public policies to control drug expenditure in Korea have focused on price control. In this study, we decomposed growth of diabetes drug expenditure in Korea.

METHODS: :

The study used National Health Insurance Service (NHIS) claims data on diabetes drugs for 10 years between January 1, 2003 and December 31, 2012. We included new or incrementally modified diabetes drugs for which listing prices were negotiated between firms and NHIS and their generic counterparts. Drug expenditure was decomposed into price and volume. Volume is further decomposed into the proportion of monthly volume for each drug in its therapeutic class (composition mix), the proportion of sum of quantity used in new and existing drugs (therapeutic mix) for a given therapeutic group, and the total volume used for new and existing drugs (total volume). We generated Fisher’s Ideal Index to calculate contribution of each component of total drug expenditure to its growth. RESULTS: :

The price of diabetes drugs as a whole decreased total drug expenditure since 2006, whereas growth of volume explained most of the growth of total pharmaceutical expenditure during 2006 and 2010. Particularly between 2011 and 2012 when price decreased 12% due to nationally implemented price cut for almost all listed drugs, the volume still increased 5%. Further decomposition of volume showed that the change in the proportion of volume of new diabetes drugs in total volume minimally contributed to growth in total diabetes drug expenditure.

  CONCLUSIONS: :

Our results showed that growth in quantity (volume) index explained most of the growth in total pharmaceutical expenditure for diabetes drugs, whereas price index overall decreased for the same time period. These results imply that volume control is more critical for policy measured related to drug expenditure control.