Chapter 2

There are different reasons that explain the variation in distribution of expenditure by type
of care. These include innovation in health technology, government reforms aimed at
improving efficiency and opportunities for optimal allocation of resources, including
reforms to models of payment 16 .
Drugs continue to constitute an important component of health care costs. At 21,4%,
Italy lies above the OECD mean (it is worth emphasising that more than 45,0% of this is
private expenditure) (Figure 11). In 2004, this item amounted to a little over 17,0% of total
health expenditure in the OECD area 17 (18,0% in 2002). Here again, the variation is substantial,
ranging from 8,5% in Luxembourg to 27,4% in Korea (looking only at the countries
for which a 2004 comparison is possible).
Levels of drug expenditure thus differ greatly between countries, reflecting great differences
in prices and in quantities prescribed and consumed.
Using per capita expenditure as indicator for inter-country comparison, one finds that
Italy comes fourth in order of pharmaceutical expenditure per capita in the OECD area 16
with $ 512 PPP in 2004 (Figure 10). However it should be emphasised that when per capita
expenditure is split into public and private, our country is seen as that with the highest
private share in the per capita total in the EU, confirming concerns over the continuous
manoeuvres on pharmaceuticals that risk having adverse and worrying consequences for
the populace (see catastrophic payment). The United States is the country that spends
most at $ 752 PPP per capita on pharmaceuticals.
The share of drug expenditure can vary greatly among countries with similar levels of
health expenditure per capita. For example Denmark and France have almost the same
per capita health expenditure but Denmark spends about 9,4% of its total on drugs, whereas
France spends about 19,0%.
Looking at the period 1992-2002 (the last for which it is possible to make a comparison)
expenditure on pharmaceuticals rose annually 1,3 times faster than total health expenditure
(Mennini and Colombo, 2004). There are various reasons for this rapid rise, starting
with the use of new, innovative and more costly drugs and the use of pharmaceuticals to
replace some other forms of treatment.
In 2004 private pharmaceutical expenditure accounted for about 76,0% of total pharmaceutical
expenditure in the United States, 89,0% in Mexico and 62,0% in Canada. OECD
countries have followed different routes in their attempts to hold down the rapid growth
in expenditure on pharmaceuticals. Very often, these have been temporary or short term
(as in Italy and France) and have not brought the anticipated benefits.
16 See Docteur and Oxley (2003).
17 The mean does not include New Zealand, Turkey and the United Kingdom, for which data are not available. For Belgium,
Germany, Japan and Slovakia, the last data available are for 2003, while for Australia, the Netherlands, the Czech Republic
and Hungary, the last data available are for 2002.
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CEIS Health Report 2006