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The effects of drug market regulation on pharmaceutical prices in Europe: overview and evidence from the market of ACE inhibitors

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  • Fritz von der Schulenburg
  • Sotiris Vandoros
  • Panos Kanavos

Abstract

This study provides an overview of policy measures targeting pharmaceutical expenditure in Europe and analyses their impact on originator pharmaceutical prices. Panel data methods are used to examine the market of ACE Inhibitors in six European countries (Denmark, France, Germany, Netherlands, Sweden, United Kingdom) over period 1991-2006. We find that although some measures are effective in reducing originator prices, others appear to have an insignificant effect. Results suggest that supply side measures such as mandatory generic substitution, regressive pharmacy mark-ups and claw-backs are effective in reducing pharmaceuticals prices. Results are not as strong for demand side measures. Profit controls and the use of cost-effectiveness analysis appear to have a negative effect on prices, while results on reference pricing are inconclusive. Findings also indicate that, although originator prices are not immediately affected by generic entry, they may be influenced by changes in generic prices post patent expiry. Copyright von der Schulenburg et al; licensee Springer. 2011

Suggested Citation

  • Fritz von der Schulenburg & Sotiris Vandoros & Panos Kanavos, 2011. "The effects of drug market regulation on pharmaceutical prices in Europe: overview and evidence from the market of ACE inhibitors," Health Economics Review, Springer, vol. 1(1), pages 1-8, December.
    • Handle: RePEc:spr:hecrev:v:1:y:2011:i:1:p:1-8:10.1186/2191-1991-1-18
    DOI: 10.1186/2191-1991-1-18
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    1. Kanavos, Panos G. & Vandoros, Sotiris, 2011. "Determinants of branded prescription medicine prices in OECD countries," Health Economics, Policy and Law, Cambridge University Press, vol. 6(3), pages 337-367, July.
    2. Brekke, Kurt R. & Konigbauer, Ingrid & Straume, Odd Rune, 2007. "Reference pricing of pharmaceuticals," Journal of Health Economics, Elsevier, vol. 26(3), pages 613-642, May.
    3. Steven N. Wiggins & Robert Maness, 2004. "Price Competition in Pharmaceuticals: The Case of Anti-infectives," Economic Inquiry, Western Economic Association International, vol. 42(2), pages 247-263, April.
    4. Margaret K. Kyle, 2007. "Pharmaceutical Price Controls and Entry Strategies," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 88-99, February.
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    1. Espinosa, Oscar & Rodríguez, Jhonathan & Ávila, Diego & Rodríguez-Lesmes, Paul & Basto, Sergio & Romano, Giancarlo & Mesa, Lorena & Enríquez, Hernán, 2023. "The impact of updating health benefits plans on health technologies usage and expenditures: the case of Colombia," Documentos de Trabajo 20821, Universidad del Rosario.
    2. Nika Marđetko & Mitja Kos, 2018. "Introduction of therapeutic reference pricing in Slovenia and its economic consequences," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(4), pages 571-584, May.
    3. Joosse, Iris R. & Tordrup, David & Bero, Lisa & Mantel-Teeuwisse, Aukje K. & van den Ham, Hendrika A., 2023. "A critical review of methodologies used in pharmaceutical pricing policy analyses," Health Policy, Elsevier, vol. 134(C).
    4. Sotiris Vandoros, 2014. "Therapeutic Substitution Post‐Patent Expiry: The Cases Of Ace Inhibitors And Proton Pump Inhibitors," Health Economics, John Wiley & Sons, Ltd., vol. 23(5), pages 621-630, May.
    5. Andia, Tatiana & Mantilla, César & Morales, Álvaro & Ortiz, Santiago & Rodríguez-Lesmes, Paul, 2022. "Does price-cap regulation work for increasing access to contraceptives? Aggregate- and pharmacy-level evidence from Colombia," Social Science & Medicine, Elsevier, vol. 311(C).
    6. Park, Sun-Young & Han, Euna & Kim, Jini & Lee, Eui-Kyung, 2016. "Factors influencing the difference between forecasted and actual drug sales volumes under the price–volume agreement in South Korea," Health Policy, Elsevier, vol. 120(8), pages 867-874.
    7. Adrian Towse & Michele Pistollato & Jorge Mestre-Ferrandiz & Zeba Khan & Satyin Kaura & Louis Garrison, 2015. "European Union Pharmaceutical Markets: A Case for Differential Pricing?," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 22(2), pages 263-275, July.
    8. Tomasz Zaprutko & Dorota Kopciuch & Krzysztof Kus & Piotr Merks & Monika Nowicka & Izabela Augustyniak & Elżbieta Nowakowska, 2017. "Affordability of medicines in the European Union," PLOS ONE, Public Library of Science, vol. 12(2), pages 1-13, February.
    9. Giuseppe Carone & Christoph Schwierz & Ana Xavier, 2012. "Cost-containment policies in public pharmaceutical spending in the EU," European Economy - Economic Papers 2008 - 2015 461, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    10. Fabio Pammolli & Armando Rungi, 2016. "Access to Medicines and European Market Integration," Working Papers 01/2016, IMT School for Advanced Studies Lucca, revised Jan 2016.
    11. Massimo Florio & Chiara Pancotti, 2022. "European pharmaceutical research and development. Could a public infrastructure overcome market failures?," Working Papers 202202, CSIL Centre for Industrial Studies.
    12. Stephan Eger & Jörg Mahlich, 2014. "Pharmaceutical regulation in Europe and its impact on corporate R&D," Health Economics Review, Springer, vol. 4(1), pages 1-9, December.
    13. Dominik J. Wettstein & Stefan Boes, 2019. "Effectiveness of National Pricing Policies for Patent-Protected Pharmaceuticals in the OECD: A Systematic Literature Review," Applied Health Economics and Health Policy, Springer, vol. 17(2), pages 143-162, April.
    14. Leopold, Christine & Mantel-Teeuwisse, Aukje Katja & Vogler, Sabine & de Joncheere, Kees & Laing, Richard Ogilvie & Leufkens, Hubert G.M., 2013. "Is Europe still heading to a common price level for on-patent medicines? An exploratory study among 15 Western European countries," Health Policy, Elsevier, vol. 112(3), pages 209-216.

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