Parallel Imports and Mandatory Substitution Reform - A Kick or A Muff for Price Competition in Pharmaceuticals?
AbstractWhat has been the effect of competition from parallel imports on prices of locally-sourced onpatent drugs? Did the 2002 Swedish mandatory substitution reform increase this competition? To answer these questions, we carried out difference-in-differences estimation on monthly data for a panel of all on-patent prescription drugs sold in Sweden during the 40 months from January 2001 through April 2004. On average, facing competition from parallel imports caused a 15-17% fall in price. While the reform increased the effect of competition from parallel imports, it was only by 0.9%. The reform, however, did increase the effect of therapeutic competition by 1.6%.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by HUI Research in its series HUI Working Papers with number 49.
Length: 32 pages
Date of creation: 01 Apr 2011
Date of revision:
Contact details of provider:
Postal: HUI Research, Regeringsgatan 60, 103 29 Stockholm, Sweden
Phone: +46 (0)8 762 72 80
Fax: +46 (0)8 679 76 06
Web page: http://www.hui.se/
More information through EDIRC
parallel imports; pharmaceutical drugs; price competition; reference pricing; therapeutic competition;
Find related papers by JEL classification:
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-07-27 (All new papers)
- NEP-COM-2011-07-27 (Industrial Competition)
- NEP-HME-2011-07-27 (Heterodox Microeconomics)
- NEP-IPR-2011-07-27 (Intellectual Property Rights)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Margaret K. Kyle, 2007.
"Strategic Responses to Parallel Trade,"
NBER Working Papers
12968, National Bureau of Economic Research, Inc.
- Kurt R. Brekke & Ingrid Königbauer & Odd Rune Straume, 2006.
"Reference Pricing of Pharmaceuticals,"
CESifo Working Paper Series
1825, CESifo Group Munich.
- Lopez-Casasnovas, Guillem & Puig-Junoy, Jaume, 2000. "Review of the literature on reference pricing," Health Policy, Elsevier, vol. 54(2), pages 87-123, November.
- Pecorino, Paul, 2002. "Should the US allow prescription drug reimports from Canada?," Journal of Health Economics, Elsevier, vol. 21(4), pages 699-708, July.
- Granlund, David, 2009. "Are private physicians more likely to veto generic substitution of prescribed pharmaceuticals?," Social Science & Medicine, Elsevier, vol. 69(11), pages 1643-1650, December.
- Granlund, David & Rudholm, Niklas, 2008. "Consumer Loyalty in the Swedish Pharmaceuticals Market," UmeÃ¥ Economic Studies 742, Umeå University, Department of Economics, revised 21 Feb 2012.
- Brekke, Kurt R. & Grasdal, Astrid L. & Holms, Tor Helge, 2009.
"Regulation and pricing of pharmaceuticals: Reference pricing or price cap regulation?,"
European Economic Review,
Elsevier, vol. 53(2), pages 170-185, February.
- Brekke, Kurt R. & Grasdal, Astrid L. & Holmås, Tor Helge, 2006. "Regulation and Pricing of Pharmaceuticals: Reference Pricing or Price Cap Regulation?," Working Papers in Economics 14/06, University of Bergen, Department of Economics.
- Kurt R. Brekke & Astrid L. Grasdal & Tor Helge Holmås, 2007. "Regulation and Pricing of Pharmaceuticals: Reference Pricing or Price Cap Regulation?," CESifo Working Paper Series 2059, CESifo Group Munich.
- Mats A. Bergman & Niklas Rudholm, 2003. "The Relative Importance of Actual and Potential Competition: Empirical Evidence From the Pharmaceuticals Market," Journal of Industrial Economics, Wiley Blackwell, vol. 51(4), pages 455-467, December.
- Thomas Aronsson & Mats Bergman & Niklas Rudholm, 2001. "The Impact of Generic Drug Competition on Brand Name Market Shares – Evidence from Micro Data," Review of Industrial Organization, Springer, vol. 19(4), pages 423-433, December.
- Anders Anell & Ulf Persson, 2005. "Reimbursement and clinical guidance for pharmaceuticals in Sweden," The European Journal of Health Economics, Springer, vol. 6(3), pages 274-279, September.
- David Granlund & Niklas Rudholm, 2011. "Consumer Information and Pharmaceutical Prices: Theory and Evidence," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 73(2), pages 230-254, 04.
- Ganslandt, Mattias & Maskus, Keith E., 2004.
"Parallel Import and the Pricing of Pharmaceutical Products: Evidence from the European Union,"
Working Paper Series
622, Research Institute of Industrial Economics.
- Ganslandt, Mattias & Maskus, Keith E., 2004. "Parallel imports and the pricing of pharmaceutical products: evidence from the European Union," Journal of Health Economics, Elsevier, vol. 23(5), pages 1035-1057, September.
- Miraldo, Marisa, 2009. "Reference pricing and firms' pricing strategies," Journal of Health Economics, Elsevier, vol. 28(1), pages 176-197, January.
- Jorge Mestre, 2003. "Reference prices: The Spanish way," Investigaciones Economicas, Fundación SEPI, vol. 27(1), pages 125-149, January.
- Izabela Jelovac & Catalina Bordoy, 2005. "Pricing and Welfare Implications of Parallel Imports in the Pharmaceutical Industry," International Journal of Health Care Finance and Economics, Springer, vol. 5(1), pages 5-21, January.
- Mark E Schaffer, 2005. "XTIVREG2: Stata module to perform extended IV/2SLS, GMM and AC/HAC, LIML and k-class regression for panel data models," Statistical Software Components S456501, Boston College Department of Economics, revised 24 Jul 2012.
- Sara Ellison Fisher & Iain Cockburn & Zvi Griliches & Jerry Hausman, 1997.
"Characteristics of Demand for Pharmaceutical Products: An Examination of Four Cephalosporins,"
RAND Journal of Economics,
The RAND Corporation, vol. 28(3), pages 426-446, Autumn.
- Ellison, S & Cockburn, I & Griliches, A & Hausman, J, 1996. "Characteristics of Demand for Pharmaceutical Products : an Examination of four Cephalosporins," Working papers 96-24, Massachusetts Institute of Technology (MIT), Department of Economics.
- Yongmin Chen & Keith Maskus, 2005. "Vertical Pricing and Parallel Imports," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(1), pages 1-18.
- Granlund, David, 2010. "Price and welfare effects of a pharmaceutical substitution reform," Journal of Health Economics, Elsevier, vol. 29(6), pages 856-865, December.
- Maskus, Keith E. & Yongmin Chen, 2000.
"Vertical price control and parallel imports - theory and evidence,"
Policy Research Working Paper Series
2461, The World Bank.
- Keith E. Maskus & Yongmin Chen, 2004. "Vertical Price Control and Parallel Imports: Theory and Evidence," Review of International Economics, Wiley Blackwell, vol. 12(4), pages 551-570, 09.
- Granlund, David & Rudholm, Niklas, 2008. "Consumer Loyalty in the Swedish Pharmaceuticals Market," HUI Working Papers 17, HUI Research.
- J. Lundkvist, 2002. "Pricing and reimbursement of drugs in Sweden," The European Journal of Health Economics, Springer, vol. 3(1), pages 66-70, March.
- Panos Kanavos & Joan Costa-Font, 2005. "Pharmaceutical parallel trade in Europe: stakeholder and competition effects," Economic Policy, CEPR;CES;MSH, vol. 20(44), pages 751-798, October.
- Granlund, David & Yesim Köksal, Miyase, 2012. "EU Enlargement, Parallel Trade and Price Competition in Pharmaceuticals - What’s to Blame? Derogation or Perception?," HUI Working Papers 59, HUI Research.
- Granlund, David & Yesim Köksal, Miyase, 2011. "EU Enlargement, Parallel Trade and Price Competition in Pharmaceuticals - What’s to Blame? Derogation or Perception?," UmeÃ¥ Economic Studies 831, Umeå University, Department of Economics.
- Brekke, Kurt R. & Holmås, Tor Helge & Straume, Odd Rune, 2014.
"Price Regulation and Parallel Imports of Pharmaceuticals,"
Discussion Paper Series in Economics
1/2014, Department of Economics, Norwegian School of Economics.
- Kurt R. Brekke & Tor Helge Holmås & Odd Rune Straume, 2014. "Price Regulation and Parallel Imports of Pharmaceuticals," NIPE Working Papers 01/2014, NIPE - Universidade do Minho.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Helena Nilsson).
If references are entirely missing, you can add them using this form.