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Price and welfare effects of a pharmaceutical substitution reform

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  • Granlund, David

    ()
    (Department of Economics, Umeå University)

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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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    File URL: http://www.econ.umu.se/DownloadAsset.action?contentId=72725&languageId=3&assetKey=ues777
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    Bibliographic Info

    Paper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 777.

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    Length: 29 pages
    Date of creation: 13 Aug 2009
    Date of revision:
    Handle: RePEc:hhs:umnees:0777

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    Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
    Phone: 090 - 786 61 42
    Fax: 090 - 77 23 02
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    Web page: http://www.econ.umu.se/
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    Related research

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

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