Summary

Background: It is not clear to what extent the drug economy in Israel's health maintenance organizations is responsive to major healthcare reforms.

Objective: To provide information on how drug expendi­tures, revenues, net costs and drug utilization have changed in the wake of the 1995 National Health Insurance Law in Israel.

Methods: This study compares trends in aggregate sick fund expenditures, revenues (patient co-payment) and net costs (expenditures less revenues) in Israel's four health maintenance organizations for the 3 year period 1992-1994 prior to the introduction in 1995 of the NHI Law, with that of the 4 year period 1995-1998 following its introduction. This analysis is similarly carried out for Israel’s largest HMO, Clalit Health Services, and for the three smaller HMOs combined.

Results: The pace of growth in the pre-NHI era in drug expenditures and particularly in drug revenues was drastically reduced in the NHI era - whether measured as totals or as per insured person (age-adjusted) or in real terms at constant medicine prices. These trends were mirrored to a large extent in

Conclusions: The impact of the NHI Law on the HMO drug economy has been substantial. The evidence suggests a decline in both the qualitative (basket of drugs consumed) and quantitative (volume of drugs consumed) elements of growth. These changes in expenditure and revenue trends are discussed in the light of the evolving involvement of the Israel Ministry of Health in drug policy within the framework of the NHI, with emphasis on the basket of drugs reimbursed and co­payments for prescriptions.