Charging for drugs and services affects their consumption - it decreases. But, John Appleby reports, it does little to contain costs and is relatively ineffective

Charging patients for the use of health services (also known as cost sharing or co-payments) is increasingly seen as par t of the solution to reducing unnecessary demand and containing growing public spending on healthcare in many countries.

For some countries, such as the UK, charging patients has been mainly justified as a revenue earner for public healthcare systems, generating money for improving services.

While many European countries levy charges (usually a small proportion of the actual cost) for visits to GPs, inpatient care, dentistry and pharmaceuticals, the UK has been more circumspect in its willingness to charge. But the UK has not had to grapple with uncontrolled healthcare spending, so charging has not been seen as particularly relevant.

Perhaps more than this, requiring patients to pay is a rather perverse and retrograde step to take in a service expressly set up to reduce barriers to healthcare.

However, the NHS does charge for drugs, and for dental and optical services and long-term care for elderly people.

Charges (in one form or another) have effectively excluded many from universal care.

Despite this (and the annual outcry over increases in charges) there are only a handful of studies which have attempted to examine the impact of cost sharing in the UK.

Giovanni Fattore has usefully summarised five UK studies which have looked at the effect of charging for prescription medicines.

Although there were differences in the exact value of the relationship between charges and consumption, overall the studies suggested that a 10 per cent increase in charges results in a 3 per cent decrease in consumption. In economic terms, this suggests that the demand for drugs is relatively inelastic. So as a cost-containment measure, charging is relatively ineffective.

Nearly 34 million people in England (generating 87 per cent of the drugs bill) are exempt from charges, so these results only apply to a relatively wealthy and healthy part of the population. If charges were universal, it would certainly be the case that increases in charges would result in much bigger reductions in consumption. The high level of exemptions also means that, as a revenue earner for the NHS, charging is not particularly profitable (around 13 per cent of the total drugs bill is covered by prescription charges).

None of the UK studies, and, according to Fattore, no study in any public healthcare system has addressed the key quest ion of the impact of charging on health(not just on consumption). What limited evidence there is (primarily from the RAND health insurance experiment) suggests that exempting low-income patients from cost-sharing arrangements improved their health.

2The question for proponents of charging, therefore, is how much additional illness they think is acceptable for the money generated by additional charges.


1 Fattore G. Cost containment and healthcare reforms in the British NHS. In Healthcare and cost containment in the European Union. Mossialos E, Le Grand J (eds). Aldershot: Ashgate, 1999.

2 Brook H, Ware J, Rogers W et al . Does free care improve adults' health? New England J of Med 1983; 309 (23): 1426-34.