Abstract
Expenditure on drugs is increasing rapidly in many countries, and this has led to increased interest in measures to contain drug expenditure. One measure that has been discussed is to increase user charges for prescription drugs. In this article, we consider whether or not raising user charges decreases the consumption of drugs. We also discuss how to judge if increased user charges for drugs are desirable from an economic viewpoint. We conclude that the decision to increase user charges for prescription drugs should not be viewed as an issue of cost containment, but as a matter of balancing the societal costs against the societal benefits of increased user charges.