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Price and welfare effects of a pharmaceutical substitution reform

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  • Granlund, David

    ()
    (The Swedish Retail Institute (HUI))

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    Abstract

    The price effects of the Swedish pharmaceutical substitution reform are analyzed using data for a panel of all pharmaceutical product sold in Sweden in 1997--2007. The price reduction due to the reform was estimated to average 10% and was found to be significantly larger for brand name pharmaceuticals than for generics. The results also imply that the reform amplified the effect of generic entry has on brand-name prices by a factor of ten. Results of a demand-estimation imply that the price reductions increased total pharmaceutical consumption by 8% and consumer welfare by SEK 2.7 billion annually.

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    Bibliographic Info

    Paper provided by HUI Research in its series HUI Working Papers with number 21.

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    Length: 29 pages
    Date of creation: 07 Apr 2009
    Date of revision:
    Publication status: Published as Granlund, David, 'Price and welfare effects of a pharmaceutical substitution reform' in Journal of Health Economics, 2010, pages 856-865.
    Handle: RePEc:hhs:huiwps:0021

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    Postal: HUI Research, Regeringsgatan 60, 103 29 Stockholm, Sweden
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    Related research

    Keywords: drugs; generic competition; equivalent variarion; demand estimation;

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