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The power of r – pharmaceutical sales decomposition in Cyprus public healthcare sector and determinants of drug expenditure evolution: any lessons learned?

The pharmaceutical sector has been established as the primary cost driver in health. The scope of this paper is to explore the drivers of pharmaceutical expenditure in Cyprus by decomposing sales and assessing impact of prices, volumes and substitution effect. We used a statistical approach to decompose the growth of public pharmaceutical expenditure during 2005–2011 into three elements: 1) substitution effect; 2) price effect; and 3) increase of consumption. We further decomposed consumption into: 1) prescription/visits; 2) visits/beneficiaries; and 3) beneficiaries. Pharmaceutical expenditure grew by 31.4 % and volume of medicines dispensed increased by 55%. Prices declined by 11% and product-mix residual was -5.5%, indicating that Cyprus experienced a switch to cheaper medicines (generics) without compromising access of patients to innovative medicines. This was enhanced by guidelines, monitoring of prescribing behavior, generic substitution and efficient tendering. The increasing number of products per prescriptions should be monitored with caution.