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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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References

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  1. 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, vol. 25(6), pages 443-454.
  2. Puig-Junoy, Jaume, 2007. "The impact of generic reference pricing interventions in the statin market," Health Policy, Elsevier, vol. 84(1), pages 14-29, November.
  3. Zweifel, Peter & Crivelli, Luca, 1996. "Price Regulation of Drugs: Lessons from Germany," Journal of Regulatory Economics, Springer, vol. 10(3), pages 257-73, November.
  4. Schneeweiss, Sebastian, 2007. "Reference drug programs: Effectiveness and policy implications," Health Policy, Elsevier, vol. 81(1), pages 17-28, April.
  5. Jaume Puig-Junoy, 2005. "What is Required to Evaluate the Impact of Pharmaceutical Reference Pricing?," Applied Health Economics and Health Policy, Springer Healthcare | Adis, vol. 4(2), pages 87-98.
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Citations

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Cited by:
  1. 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 11/18, HEDG, c/o Department of Economics, University of York.
  2. 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, vol. 14(6), pages 959-969, December.
  3. Aysegul Timur & Gabriel Picone & Jeffrey DeSimone, 2011. "Has the European union achieved a single pharmaceutical market?," International Journal of Health Care Finance and Economics, Springer, vol. 11(4), pages 223-244, December.
  4. Herr, Annika, 2012. "Rationalisierung und Wettbewerb im Arzneimittelmarkt," DICE Ordnungspolitische Perspektiven 31, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

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