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 Umeå University, Department of Economics in its series Umeå Economic Studies with number 777.
Length: 29 pages
Date of creation: 13 Aug 2009
Date of revision:
Contact details of provider:
Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
Phone: 090 - 786 61 42
Fax: 090 - 77 23 02
Web page: http://www.econ.umu.se/
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drugs; generic competition; equivalent variation; 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-08-22 (All new papers)
- NEP-COM-2009-08-22 (Industrial Competition)
- NEP-HEA-2009-08-22 (Health Economics)
- NEP-MKT-2009-08-22 (Marketing)
- NEP-REG-2009-08-22 (Regulation)
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