Pharmaceutical Expenditures as a Correlate of Population Health in Industrialized Nations

Abstract

Background: In recent years, healthcare spending has outpaced economic growth in developed countries, with pharmaceutical expenditures being a key driver of this trend. While a significant number of studies investigating the effect of healthcare resource productivity on health status have been done, only a few have disaggregated pharmaceutical expenditures from total healthcare expenditures. Objective: To assess the independent association between pharmaceutical expenditures and health outcomes in 14 industrialized countries. Methods: We used data from the Organisation for Economic Co-operation and Development to construct a panel data set covering the years from 1985 to 2001. These data contain information on pharmaceutical expenditures, other healthcare expenditures, environmental health determinants, lifestyle health determinants, potential years of life lost, and life expectancy at ages 65 and 80 years across 14 industrialized nations. We estimated the relationship between pharmaceutical expenditures and potential years of life lost and life expectancy at ages 65 and 80 years for both males and females, using nonlinear fixed-effects regression models that corrected for serial correlation. All explanatory variables were lagged by 5 years to account for their cumulative effect on population health outcomes. Results: Pharmaceutical expenditures proved to be a robust correlate of health outcomes from 1985 to 2001 in this sample of nations, when controlling for the effects of other variables likely to impact population health outcomes. Our estimates imply that a 10% increase in pharmaceutical expenditures during these years was associated with a 0.3% (95% CI 0.1% to 0.5%; ~21 days) increase in female life expectancy at age 65 years (p < 0.05), while a similar increase was associated with a 0.4% (95% CI 0.1 to 0.7; ~24 days) increase in male life expectancy at age 65 years (p < 0.05) and a 0.5% increase (95% CI 0.03 to 1.0; ~14 days) at age 80 years (p < 0.05). Conclusions: Our results suggest that significant, but small, marginal gains in population health outcomes were associated with increased pharmaceutical expenditures in developed nations during the period studied.