What explains ‘generosity’ in the public financing of high-tech drugs? An empirical investigation of 25 OECD countries and 11 controversial drugs

Abstract

In times of increasing cost pressures, public healthcare systems in Organisation for Economic Co-operation and Development (OECD) countries face the question of whether and to which extent new high-tech drugs are to be financed within their public healthcare systems. Systematic empirical research that explains across-country variation in these decisions is, however, almost non-existent. We analyse an original dataset that contains coverage decisions for 11 controversial drugs in 25 OECD countries using multilevel modelling. Our results indicate that the ‘generosity’ with which controversial new drugs are publicly financed is unrelated to a country’s wealth and general expenditure levels for healthcare. However, healthcare systems financed through social insurance contributions tend to be more generous than tax-financed ones. Moreover, we uncover evidence suggesting that the institutional characteristics of the decision-making process matter systematically for decisions on whether to finance controversial drugs.