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The price effect of allowing non-pharmacy outlets to sell OTC drugs in Korea

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  • Hoe Sang Chung
  • Min Kim

Abstract

By the amendment of the Pharmaceutical Affairs Act in 2012, non-pharmacy outlets (confined to 24-hour convenience stores) in Korea were permitted to sell 13 over-the-counter (OTC) drugs. This article empirically examines the effect of the regulatory reform on OTC drug prices. To do so, we use county-level price data of 7 OTC drugs for the years of 2012 and 2013. Among them, 2 OTC drugs are available at non-pharmacy outlets due to the deregulation, and the remaining 5 are still only available at pharmacies. Employing a difference-in-differences estimation strategy, we find that after the regulatory reform, prices of the 2 OTC drugs increased by only 1.1% while those of the rest 5 increased by 6.5%. This result has implications for the government’s policy of designating non-pharmacy outlets that can sell OTC drugs from the viewpoint of consumer welfare.

Suggested Citation

  • Hoe Sang Chung & Min Kim, 2018. "The price effect of allowing non-pharmacy outlets to sell OTC drugs in Korea," Applied Economics Letters, Taylor & Francis Journals, vol. 25(18), pages 1316-1318, October.
    • Handle: RePEc:taf:apeclt:v:25:y:2018:i:18:p:1316-1318
    DOI: 10.1080/13504851.2017.1420868
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    Cited by:

    1. Jo, Wooyong & Nam, Hyoryung & Choi, Jeonghye, 2022. "Opening the OTC drug market: The effect of deregulation on retail pharmacy’s performance," International Journal of Research in Marketing, Elsevier, vol. 39(3), pages 847-866.

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