The paradox of decreasing prices and increasing costs for diagnostic tests, imaging, and drugs in Japan

Analysis of the 1987-91 national outpatient claims data shows that the percentage of patients undergoing sophisticated diagnostic tests tended to increase and was greater if the hospital was larger, in the public sector, or affiliated with an university. For imaging, the percentage that had CAT scans performed increased, while the percentage undergoing x-rays using contrast medium and other tomography decreased. However, for drugs, newer and more expensive ones tended to be preferred irrespective of the providers' characteristics. Although costs arising from the shift to more expensive and sophisticated technologies have been largely contained by reducing their prices in the fee schedule, this cost-containment strategy faces structural problems. We advocate the establishment of an infrastructure that offers incentives for providers to conduct technology assessment and to use the results.