Price and welfare effects of a pharmaceutical substitution reform
AbstractThe 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 InfoPaper provided by HUI Research in its series HUI Working Papers with number 21.
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.
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drugs; generic competition; equivalent variarion; demand estimation;
Find related papers by JEL classification:
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
- L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology
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