Expenditure and consumption of medicines in Israel 1975-85: analysis of trends and elements of growth.

Data on the annual expenditure on medicines and medical supplies have been collected and used to provide the expenditure on medicines only, by the main purchasing sectors for each of the fiscal years from 1975/76 to 1984/85 inclusive. During the decade total expenditure at constant prices increased by 145% with an average annual growth of 10.7%; on a per capita basis the growth was 107 and 8.7%, respectively. The average annual growth decreased during the later years. The real average cost of all medicines actually consumed at constant prices was derived from a pharmaceutical audit. The changes in this cost element are an indication of qualitative changes in drug therapy and in the introduction of new drugs. The analysis shows that this structural change is more significant than changes in quantity of drugs consumed per capita and changes derived from the increase in population. Comparing cross-national per capita expenditure in common units of currency, Israel had one of the lowest levels of consumption among the developed countries. Nevertheless, from 1975 to 1982 Israel had one of the highest rates of growth in per capita consumption at constant medicine prices. A discussion of environmental factors leads to the conclusion that the quality of therapeutic advantage gained by a (decreasing) number of innovative products, coupled with an increase in demand from the unprecedented growth in the number of the elderly and chronically ill, has resulted in a significant growth in consumption during the decade.