Abstract
During the last two decades, government pharmaceutical expenditures in Spain have increased dramatically. Several forces have influenced both the usage and prices of pharmaceutical products during this period. Among those forces are demographic changes, legal changes, and the introduction of new higher priced drugs. The goal of this study is to analyze the contribution of all these potential explanations on the total increase in public pharmaceutical expenditures in Spain using aggregate state data between the years of 1997 and 2001. The results of this study found that most of the increase in pharmaceutical expenditures in Spain is concentrated among individuals with no co-payment (retired individuals) and also that the increase is due to price increases caused by the introduction of new drugs of moderate and low therapeutic novelty. Pharmaceutical prices in Spain are considered one of the lowest among developed countries (Scherer 2000); however, their pharmaceutical expenditures are one of the highest among those countries. Furthermore, during the last two decades these expenditures have increased dramatically. For example, in 1980 the Spanish public expenditure on pharmaceutical products per individual was $22.64 (1997$), but in 2001 this expenditure had risen to $64.51 (1997$). Unlike increases in pharmaceutical expenditures in the US that were due to increases in drug coverage (Danzon and Pauly 2002), Spain had almost complete drug coverage at the beginning of the study period; therefore, we cannot attribute the increase in government pharmaceutical expenditures to increases in coverage.