Does drug price-regulation affect healthcare expenditures?

Omer Ben-Aharon, Oren Shavit, Racheli Magnezi

Research output: Contribution to journalArticlepeer-review

9 Scopus citations


Background: Increasing health costs in developed countries are a major concern for decision makers. A variety of cost containment tools are used to control this trend, including maximum price regulation and reimbursement methods for health technologies. Information regarding expenditure-related outcomes of these tools is not available. Objective: To evaluate the association between different cost-regulating mechanisms and national health expenditures in selected countries. Methods: Price-regulating and reimbursement mechanisms for prescription drugs among OECD countries were reviewed. National health expenditure indices for 2008–2012 were extracted from OECD statistical sources. Possible associations between characteristics of different systems for regulation of drug prices and reimbursement and health expenditures were examined. Results: In most countries, reimbursement mechanisms are part of publicly financed plans. Maximum price regulation is composed of reference-pricing, either of the same drug in other countries, or of therapeutic alternatives within the country, as well as value-based pricing (VBP). No association was found between price regulation or reimbursement mechanisms and healthcare costs. However, VBP may present a more effective mechanism, leading to reduced costs in the long term. Conclusions: Maximum price and reimbursement mechanism regulations were not found to be associated with cost containment of national health expenditures. VBP may have the potential to do so over the long term.

Original languageEnglish
Pages (from-to)859-867
Number of pages9
JournalEuropean Journal of Health Economics
Issue number7
StatePublished - Sep 2017
Externally publishedYes


  • Drug price
  • Drug reimbursement
  • Healthcare expenditure
  • Price regulation
  • Value-based pricing

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (miscellaneous)
  • Health Policy


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