Is the shift in treatment patterns toward new, more expensive drugs still driving the increase in pharmaceutical expenditure? A decomposition analysis of expenditure data in Sweden 1990-2022

Abstract

ABSTRACT Background Pharmaceutical expenditures (PE) are increasing worldwide raising concerns about sustainability. However, the current price index provides an incomplete picture of this trend due to the rapid introduction of new drugs on the market. Objective The aim of this study is to decompose PE into their components and investigate the development in Sweden from 1990 to 2022. Methods The PE index was broken down into separate indices for price, quantity, and a residual. The residual reflects changes in expenditure driven by shifts in drug treatment patterns. Results PE increased by 227% during the study period. The decomposition showed that this increase was mainly driven by the residual (215%). Drug quantity increased by 105%, while the relative prices decreased by 50%. When dividing the whole study period into three 11-year-subperiods, the increase in real drug expenditure, drug quantity, and the residual was the highest from 1990 to 2000. Conclusions The finding that the residual is the main driver indicates that the increase in PE is due to the introduction of and shift to more expensive pharmaceutical treatments, while existing treatments tend to become cheaper. Further research is needed to determine whether newer, more expensive drugs are indeed worth the extra cost.