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 on-patent 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%.
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Bibliographic InfoPaper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 824.
Length: 32 pages
Date of creation: 13 Apr 2011
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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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-2011-04-23 (All new papers)
- NEP-COM-2011-04-23 (Industrial Competition)
- NEP-HME-2011-04-23 (Heterodox Microeconomics)
- NEP-IPR-2011-04-23 (Intellectual Property Rights)
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- 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.
- 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.
- 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.
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