The Impact of the Self-medication Taxation System on Drug Cost Control

Author Name NISHIKAWA Kohei (Kansai University) / OHASHI Hiroshi (Faculty Fellow, RIETI)
Creation Date/NO. October 2022 22-J-039
Research Project Policy Analyses on Industrial Organization
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Self-medication in the form of self-care of our health is popular in many countries. To help promote self-medication and ultimately aim to contain medical expenditures, Japan introduced a self-medication taxation system in 2017. It is not clear however whether the self-medication taxation system has reduced drug costs, as pointed out by the expert committee of the Japanese government. This paper examines the impact of the self-medication taxation system on drug cost control, using receipt data. Our analysis on the allergic rhinitis drug market indicates that the self-medication tax would reduce both the frequency of patient visits to hospitals and clinics, and the volume of prescriptions per visit. Based on these estimates, simulation is conducted to assess a counterfactual situation where there is no self-medication taxation system. As a result of changes in physician prescribing behavior, drug costs decrease by 4.9%. Furthermore, including the effect of a decrease in the frequency of patient visits, the simulation results indicate that drug expenditure is reduced by 5.8% through the self-medication tax system.