Please use this identifier to cite or link to this item: http://hdl.handle.net/1822/35389

TitleDoes reference pricing drive out generic competition in pharmaceutical markets? Evidence from a policy reform
Author(s)Brekke, Kurt R.
Canta, Chiara
Straume, Odd Rune
KeywordsPharmaceuticals
Reference pricing
Generic entry
Issue date2015
PublisherUniversidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE)
Abstract(s)In this paper we study the impact of reference pricing (RP) on entry of generic firms in the pharmaceutical market. For given prices, RP increases generic firms' expected profit, but since RP also stimulates price competition, the impact on generic entry is theoretically ambiguous. In order to empirically test the effects of RP, we exploit a policy reform in Norway in 2005 that exposed a subset of drugs to RP. Having detailed product-level data for a wide set of substances from 2003 to 2013, we find that RP increased the number of generic drugs. We also find that RP increased market shares of generic drugs, reduced the prices of both branded and generic drugs, and led to a (weakly significant) decrease in total drug expenditures. The reduction in total expenditures was relatively smaller than the reduction in average prices, reflecting the fact that lower prices stimulated total demand.
TypeWorking paper
URIhttp://hdl.handle.net/1822/35389
Publisher versionhttp://www.nipe.eeg.uminho.pt/Uploads/WP_2015/NIPE_WP_06_2015.pdf
Peer-Reviewedno
AccessOpen access
Appears in Collections:NIPE - Documentos de Trabalho

Files in This Item:
File Description SizeFormat 
NIPE_WP_06_2015.pdfNIPE WP-06/2015904,37 kBAdobe PDFView/Open

Partilhe no FacebookPartilhe no TwitterPartilhe no DeliciousPartilhe no LinkedInPartilhe no DiggAdicionar ao Google BookmarksPartilhe no MySpacePartilhe no Orkut
Exporte no formato BibTex mendeley Exporte no formato Endnote Adicione ao seu ORCID