The Relationship Between Pharmaceutical Expenditure, the Ageing Population and Income in Turkey: A Dynamic Regression Analysis

Abstract

Developments in healthcare technology and improvements in the quality of healthcare services worldwide have increased life expectancy and, consequently, the ageing population. The growing ageing population is exerting pressure on healthcare systems and their financing, threatening their financial sustainability. The ageing population's multiple medication use, chronic disease burden, and frequency of visits to outpatient clinics and emergency departments increase healthcare expenditures and, consequently, pharmaceutical expenditures. This significant increase has been a driving force for the empirical examination of this relationship. This study examines per capita pharmaceutical expenditures, the proportion of the population aged 65 and over, and per capita income. The aim of this study is to determine whether income and the elderly population affect pharmaceutical expenditures and to develop policy recommendations accordingly. To analyse the extent to which pharmaceutical expenditures are affected by the ageing population and income level, a single-equation dynamic regression analysis with a lagged dependent variable was conducted, and Newey–West HAC standard errors were applied to address heteroscedasticity and autocorrelation. The findings obtained in this study, in the short term, the proportion of the ageing population and income level do not have a statistically significant effect on pharmaceutical expenditures; however, in the long term, an increase in the ageing population raises per capita pharmaceutical expenditures. This reveals that the increase in pharmaceutical expenditures is primarily attributable to changes in the demographic structure rather than temporary factors. The study's empirical findings offer implications for health policies. The results highlight the need for policymakers to consider demographic projections when planning health and pharmaceutical budgets.