Decomposing Anti-diabetes Drugs Expenditure Increase During 2001 - 2006 in Taiwan

Presenter: Chung-Lin Yang, Institute of Health & Welfare Policy

Abstract

Rationale: The huge consume and persistent increase in pharmaceutical expenditures over the past decades has attracted the attention of policymakers. In response, many policymakers have adopted strategies to contain pharmaceutical spending. However, pharmaceutical expenditures increase is a complicated issue. Studies estimate changes in per capita drug spending usually attribute such changes into three major categories, which is “price effect”, “volume effects” and “therapeutic mix”.

Objectives: The objective of this paper is to decompose the anti-diabetes drugs expenditure between the years 2001 and 2006 in Taiwan.

Methodology: In this study, we decomposed the drug expenditure through into three components - drug price, drug volume, and drug mix on oral anti-diabetes drugs to provide empirical data analysis. The data set used in the paper was collected outpatient, inpatient, and drugstore under NHI system in Taiwan. Anti-diabetes drugs user is a people who had diabetes mellitus diagnosis (ICD-9-CM code 250) and use three or more than three times anti-diabetes drugs per year. Drug prices was measured in terms of the NHI pharmaceutical benefit scheme and divided by the consumer price index (CPI). Drug volume was calculated by defined daily dose (DDD) according to anatomical therapeutic chemical (ATC) classification system group and decomposed into 3 subcomponents: average DDD per patient, the proportion of the patient treated and the total population.

Results: The total expenditure of anti-diabetes drugs increased from NTD2.62 billion (USD 79 million) in 2001 to NTD 5.44 billion (USD 164 million) in 2006; the total drug volume increased from 234 million DDD to 419 million DDD during the same period in Taiwan. During the study period, anti-diabetes drugs expenditure increased by 100% (adjusted for general inflation by the CPI). The main reason of anti-diabetes drugs expenditure rose was the drug volume increased by about 79% and decomposed three subcomponents: average DDD per patient rose by 24%, the proportion of the patient treated rose by 39%, and the total population rose by 4%. The drug mix increased by 16% indicating the therapy switch from cheaper to more expensive drugs. Drug price decreased during the study period.

Conclusions: This study indicates that the main reason of anti-diabetes drugs expenditure rose in Taiwan between 2001 and 2006 was the number of diabetes mellitus patient increased.