Time Trends and Determinants of Pharmaceutical Expenditure in China (1990-2009)

Pharmaceutical policy reform is currently one of the primary areas of health reform in China. The national pharmaceutical policy of China has multiple objectives: to develop the domestic pharmaceutical industry and encourage innovation, to control escalation of total pharmaceutical expenditures (TPE) which constitute a substantial component of total health expenditures (THE), and to ensure access to essential medicines for poor and uninsured patients. The current pharmaceutical system has been criticized for its high costs, questionable prescribing practices, and poor regulation of drug quality. This study aims to examine the time trends and influential factors of TPE in China. Data from the 2010 China National Health Accounts Report and the 2010 China Health Statistics Year Book were used in the analysis. Time trends of TPE as a share of THE (TPE/THE), of gross domestic product [GDP] (TPE/GDP), and the relationship between TPE/THE and GDP were examined. The growth of TPE was examined after adjusting for health care utilization and GDP. The determinants of the TPE/THE and the TPE/GDP between 1990 and 2009 were investigated by two time-series regression models including the amount of prescriptions dispensed (using proxy variables of health utilization), the price indices of medical services, and the price indices of pharmaceuticals during that time period. Descriptive analyses showed that TPE and THE grew consistently during the years 1990-2009. The ratio of the THE/GDP increased more rapidly in recent years than the TPE/GDP. Furthermore, outpatient pharmaceutical expenditures (PEs) per visit and hospital PEs per admission grew throughout the study period. The amount of outpatient visits did not show a significant growth pattern during the 1990s, despite rapid GDP growth during that period. The time-series models showed that the TPE/THE was negatively associated with GDP during the same year (p = 0.039), as well as the medical consumer price index [CPI] (p = 0.021). The TPE/GDP was influenced by the price index of prescriptions (p < 0.001) and the amount of health services utilization, including inpatient admissions (p = 0.012) and outpatient visits (p = 0.003). The cost escalations in PEs and health expenditures were concurrent with GDP growth. TPE has been the major source of financial burden for patients. Even though the rapid growth in China's economy may ameliorate the overall TPE burden, control of PEs is still a key for successful health system reform.