Co-payments and the demand for pharmaceuticals: evidence from Italy

This study exploits a natural experiment in Italy to estimate how the demand for pharmaceuticals responds to variations in co-payment levels. After a period where co-payments were zero by a national law, the decision over co-payments was devolved to the twenty Italian regions. While some regions re-introduced the co-payment, others did not. Using a difference-in-difference approach on regional monthly data over the period 2001-2003, we find that the introduction of the co-payment led to a reduction in the number of prescriptions by 7%. Moreover, we find that the elasticity of the number of prescriptions per capita with respect to an increase in the co-payment, conditional on having one, is around 0.1. We also find that such effect is not symmetric. When some regions reduced (but not removed) the co-payment, the elasticity of the number of prescriptions per capita with respect to a reduction in the co-payment was around 0.01.