The Effects of Drug Subsidies Exclusion on Price Index of Sectors and Household's Expenditures; Using Structural Path Analysis

Appropriate policy making about drugs has a particular importance; and accurate economical planning in designing and organizing of this issue is an obvious necessity. This study was aimed to analyze the effects of drug subsidies omission on price index on economical sectors and households expenditures.

The method of this study is based on social accounting matrices technique and structural path analyzing approach. The study society is all economical sectors and households in Iran. Data are collected using social accounting matrices of Iran 1380, and analyzed by I-08 SAM and MATS software.

From 147 groups of commodities and services, the price index of human health services, hospital services, hen and chicken, other birds, and veterinary services had the most increases with %7.3, %7, %6.5 and %4.1; and for other commodity groups the maximum increase found 3.8%. The increase in expenditure index of urban residents is from %1.7 to %2.2; and for rural residents %1.8 to %2.7.

The drug sector subsidies omission has increased the price index for all sectors and expenditure index households. The best approach to these effects is to do preventive actions by gradual decreasing of drug subsidies, and moving toward making drug subsidies purpose based in health sector and particularly drug sub-sector.