Please use this identifier to cite or link to this item: https://hdl.handle.net/1822/11958

TitleReference pricing, competition, and pharmaceutical expenditures : theory and evidence from a natural experiment
Author(s)Brekke, Kurt R.
Holmås, Tor Helge
Straume, Odd Rune
KeywordsPharmaceuticals
Regulation
Generic competition
Issue dateMar-2011
PublisherElsevier
JournalJournal of Public Economics
Citation"Journal of Public Economics". ISSN 0047-2727.
Abstract(s)We study the impact of regulation on competition between brand-names and generics and pharmaceutical expenditures using a unique policy experiment in Norway, where reference pricing (RP) replaced price cap regulation in 2003 for a sub-sample of off-patent products. First, we construct a vertical differentiation model to analyze the impact of regulation on prices and market shares of brand-names and generics. Then, we exploit a detailed panel data set at product level covering several off-patent molecules before and after the policy reform. Off-patent drugs not subject to RP serve as our control group. We find that RP significantly reduces both brand-name and generic prices, and results in significantly lower brand-name market shares. Finally, we show that RP has a strong negative effect on average molecule prices, suggesting significant cost-savings, and that patients’ copayments decrease despite the extra surcharges under RP.
TypeArticle
URIhttps://hdl.handle.net/1822/11958
DOI10.1016/j.jpubeco.2010.11.015
ISSN0047-2727
Peer-Reviewedyes
AccessOpen access
Appears in Collections:NIPE - Artigos em Revistas de Circulação Internacional com Arbitragem Científica

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