Pharmaceutical Spending and Policy Implications for South Korea vs. OECD Countries

Abstract

To curb rapidly rising pharmaceutical expenditures, the Korean government launched a series of drug price policies during 1999-2012. However, these supply-side policies were not successful. To better understand the reasons behind the unsuccessful outcomes, we develop a modeling framework with which to analyze the growth rate of pharmaceutical expenditure in Korea. To date, few studies have examined the effects of the Korean price policies on future pharmaceutical expenditure. Our model considers Korean society’s characteristics in terms of demographic changes, prescription practices, medical technology, and lifestyle risks. Our results reveal policy impacts on the changing face of the Korean pharmaceutical market.