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Effects of the German reference drug program on ex-factory prices of prescription drugs: a panel data approach

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Author Info

  • Boris Augurzky
  • Silja Göhlmann

    (RWI Essen, Essen, Germany)

  • Stefan Gre�

    (University of Applied Sciences, Fulda, Germany)

  • Jürgen Wasem

    (University of Duisburg-Essen, Essen, Germany)

Abstract

This paper examines effects of the German social health insurance system's reference drug program (RDP) for prescription drugs on ex-factory prices. Moreover, we analyze whether manufacturers adapt prices of their products that are not subject to reference pricing as a consequence of changes in reference prices of their products that are subject to reference pricing. We use econometric panel data methods based on a large panel data set of nearly all German prescription drugs on a monthly basis between October 1994 and July 2005. They provide information on ex-factory prices, reference prices, manufacturers, type of prescription drug, and market entries and exits. Our results show that there is no full price adjustment: A 1%-change in reference prices leads to a 0.3%-change in market prices. Price adjustment, however, is fast - it mostly happens in the first month. Furthermore, the first introduction of a reference price reduces market prices of the affected products by approximately 7%. Finally, we observe a significant time effect that is positive in the market without reference prices and negative in the market with reference prices. Copyright © 2008 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.1376
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 18 (2009)
Issue (Month): 4 ()
Pages: 421-436

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Handle: RePEc:wly:hlthec:v:18:y:2009:i:4:p:421-436

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. Nina Pavcnik, 2002. "Do Pharmaceutical Prices Respond to Potential Patient Out-of-Pocket Expenses?," RAND Journal of Economics, The RAND Corporation, vol. 33(3), pages 469-487, Autumn.
  2. Patricia M. Danzon & Jonathan D. Ketcham, 2004. "Reference Pricing of Pharmaceuticals for Medicare: Evidence from Germany, the Netherlands, and New Zealand," NBER Chapters, National Bureau of Economic Research, Inc, in: Frontiers in Health Policy Research, Volume 7, pages 1-54 National Bureau of Economic Research, Inc.
  3. Stefan Gress & Dea Niebuhr & Uwe May & Jurgen Wasem, 2007. "Reform of Prescription Drug Reimbursement and Pricing in the German Social Health Insurance Market: A Comparison of Three Scenarios," PharmacoEconomics, Springer Healthcare | Adis, Springer Healthcare | Adis, vol. 25(6), pages 443-454.
  4. Schneeweiss, Sebastian, 2007. "Reference drug programs: Effectiveness and policy implications," Health Policy, Elsevier, Elsevier, vol. 81(1), pages 17-28, April.
  5. Puig-Junoy, Jaume, 2007. "The impact of generic reference pricing interventions in the statin market," Health Policy, Elsevier, Elsevier, vol. 84(1), pages 14-29, November.
  6. Jaume Puig-Junoy, 2005. "What is Required to Evaluate the Impact of Pharmaceutical Reference Pricing?," Applied Health Economics and Health Policy, Springer Healthcare | Adis, Springer Healthcare | Adis, vol. 4(2), pages 87-98.
  7. Zweifel, Peter & Crivelli, Luca, 1996. "Price Regulation of Drugs: Lessons from Germany," Journal of Regulatory Economics, Springer, Springer, vol. 10(3), pages 257-73, November.
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Cited by:
  1. Aysegul Timur & Gabriel Picone & Jeffrey S. DeSimone, 2010. "Has the European Union Achieved a Single Pharmaceutical Market?," NBER Working Papers 16261, National Bureau of Economic Research, Inc.
  2. Herr, Annika, 2012. "Rationalisierung und Wettbewerb im Arzneimittelmarkt," DICE Ordnungspolitische Perspektiven 31, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  3. Herr, A.; & Suppliet, M.;, 2011. "Co-Payment Exemptions and Reference Prices: an Empirical Study of Pharmaceutical Prices in Germany," Health, Econometrics and Data Group (HEDG) Working Papers, HEDG, c/o Department of Economics, University of York 11/18, HEDG, c/o Department of Economics, University of York.
  4. Matteo Galizzi & Simone Ghislandi & Marisa Miraldo, 2011. "Effects of Reference Pricing in Pharmaceutical Markets," PharmacoEconomics, Springer, Springer, vol. 29(1), pages 17-33, January.
  5. Simone Ghislandi & Patrizio Armeni & Claudio Jommi, 2013. "The impact of generic reference pricing in Italy, a decade on," The European Journal of Health Economics, Springer, Springer, vol. 14(6), pages 959-969, December.

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