Estimation of the Function of Medicine Demand in Islamic Republic of Iran

This article aims to estimate the function of medicine demand throughout urban and rural households in Iran and identify its influential factors. This descriptive-retrospective study was conducted in 2011 and the data required was collected from household’s budget-expense information for a 21 year period (1989-2010). Furthermore the aforementioned data was analyzed using Eviews software and T-test. There was a significant relationship between the households’ medicine expenditure and independent variables of function including households’ income، drug price index and Gp’s visit cost. Besides، high-income households (first deciles) were spending more than the low-income (10th deciles) on medicine. Both price and income elasticity of medicine demand within urban and rural households together with the impact of Gp’s visit on medicine demand were calculated between 0 and1. Authorities in the field of healthcare should devise programs to increase drug allowance and expand insurance coverage accompanied by preventing from fake demand for medicine.