Effective policy initiatives to constrain lipid-lowering drug expenditure growth in South Korea

The rapid growth of prescription drug expenditures is a major problem in South Korea. Accordingly, the South Korean government introduced a positive listing system in 2006. They also adopted various price reduction policies. Nevertheless, the total expenditure for lipid-lowering drugs have steadily increased throughout South Korea. The present study explores the factors that have influenced the increased expenditures of lipid-lowering drugs with a particular focus on the effects of statins in this process.

This paper investigates the National Health Insurance claims data for prescribed lipid-lowering drugs collected between January 1, 2005 and December 31, 2009. We specifically focused on statins and assessed the yearly variation of statin expenditure by calculating the increased rate of paired pharmaceutical expenditures over a 2 year period. Our study classified statins into three categories: new entrants, core medicines and exiting medicines. For core medicines, we further examined influencing factors such as price, amount of drugs consumed by volume, and prescription changes (substitutes for other drug).

Statin expenditure showed an average annual increase of 25.7% between 2005 and 2009. Among the different statins, the expenditure of atorvastatin showed a 36.6% annual increase rate, which was the most dramatic among all statins. Also we divided expenditure for core medicines by the price factor, volume factor, and prescription change. The result showed that annual weighted average prices of individual drug decreased each year, which clearly showed that price influenced statin expenditure in a negative direction. The use of generic drugs containing the same active ingredient as name-brand drugs increased and negatively affected statin expenditure (Generic Mix effect). However, the use of relatively expensive ingredients within statin increase, Ingredient Mix effect contributed to increased statin expenditure (Ingredient Mix effect). In particular, the volume effect was found to be critical for increasing statin expenditure as the amount of statin consumed increased steadily throughout the study period.

The recent rapid increase in statin expenditure can largely be attributed to an increase in consumption volume. In order to check drug expenditures effectively in our current situation, in which chronic diseases remain steadily on the rise, it is necessary to not only have supply-side initiatives such as price reduction, but also demand-side initiatives that could control drug consumption volume, for example: educational programs for rational prescription, generic drug promotional policies, and policies providing prescription targets.