Cost-benefit Analysis of Mandatory Prescription in Korea

Jee, Young Keon; Kim, Han Joong; Park, Eun Cheol; Kang, Hye Young

Abstract

OBJECTIVE
To evaluate the relative benefits and the costs associated with the introduction of the new pharmaceutical provision called 'Mandatory Prescription Syste m' which separates the role of physicians from that of pharmacists with respect to the prescription and dispensation of from the perspective of consumers (i.e., patients).
METHODS
The costs of the system were measured by considering both direct and indirect costs. Direct costs included additional payments for ambulatory care and dispensing fees that occurred under the new system. Indirect costs consisted of transportation expenses and costs related to time spent for physician consultation, waiting for the prescriptions to be filled, and extra traveling. Benefits identified in this study were the reduction of drug misuse and overuse, and the overall decrease in drug consumption among the Korean population. Sensitivity analysis was performed for the inclusion of benefits for outpatients of hospitals, price elasticity, and increased fees for established patients.
RESULTS
The net benefit was estimated to be about minus 1,862 billion won and the benefit-cost ratio was 0.478. This indicates that the costs of 'Mandatory Prescription' outweigh its benefits, relative to the previous system. The sensitivity analysis results for all the variables considered in this study consistently showed the benefit-cost ratio to be less than 1.
CONCLUSION
The results of this study suggest that implementing Mandatory Prescription System in Korea might be inefficient from the consumer's perspective. The results of this study do not coincide with the results of previous studies, presumably because of the differences in study design and in which items of costs and benefits were considered.