Pharmaceutical Expenditure and Life Expectancy: An Analysis of OECD Countries

Abstract

Increasing pressure has been placed on high-income countries to justify the increasing cost of health care, given the stagnant health outcomes. On this basis, the current analysis aims to assess whether a direct link exists between increasing pharmaceutical expenditures and increasing life expectancy in the 35 Organization for Economic Co-operation and Development (OECD) countries considering the systemic implications of COVID-19. A multivariate regression model using 2022 data from WHO and OECD was conducted in order to analyze the effect of pharmaceutical expenditure per capita while controlling for the potential effects of other independent variables such as GDP, urbanization, and gender ratios. Although the pharmaceutical expenditure was shown to positively affect life expectancy with a regression coefficient (β) of 0.0029, the effect failed to achieve statistical significance (p) when controlling for global factors. In contrast, the relationship between COVID-19 mortality and life expectancy was significant and negative. This research indicates that additional investments in pharmaceuticals are unlikely to yield substantial benefits to high-income countries. The lack of return on investment in pharmaceuticals since COVID-19 has led to a conclusion that resources should be allocated more efficiently and with more emphasis placed on pandemic preparedness and risk mitigation as opposed to the total dollar figure spent on pharmaceuticals.