Assessing the effects of drug price reduction policies on older people in Taiwan

Abstract

This study investigates the initial effects of the government's prescription drug price reduction policies on outpatient hypertension treatment for the elderly in Taiwan. The National Health Insurance scheme has taken a number of steps in recent years to reduce drug prices. The data used in the study comprises the medical records of approximately 137,000 hypertension patients aged 65 and above. Regression analysis is used to determine whether the average cost of prescription drugs has declined as a result of the policy. In addition, the probit model is used to examine changes in physicians' prescribing behaviour for reduced-price and full-price drugs and the effect of drug substitution on health outcomes. We find that the average cost per prescription increased slightly despite the implementation of the price reduction policies. In addition, we found that physicians do substitute full-price drugs for reduced-price drugs. However, they appear to be reluctant to reduce the use of essential drugs, even when facing rate reductions. The evidence suggests that physicians consider the profit they can derive by prescribing certain drugs; hence, health policy officials should monitor the effects of possible drug substitutions when they design policies for their own countries.