Regulation of Pharmaceutical Prices: Evidence from a Reference Price Reform in Denmark
AbstractOn April 1, 2005, Denmark changed the way references prices, a main determinant of reimbursements for pharmaceutical purchases, are calculated. The previous reference prices, which were based on average EU prices, were substituted to minimum domestic prices. Novel to the literature, we estimate the joint effects of this reform on prices and quantities. Prices decreased more than 26 percent due to the reform, which reduced patient and government expenditures by 3.0 percent and 5.6 percent, respectively, and producer revenues by 5.0 percent. The prices of expensive products decreased more than their cheaper counterparts, resulting in large differences in patient benefits from the reform.
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 University of Copenhagen. Department of Economics. Centre for Industrial Economics in its series CIE Discussion Papers with number 2010-01.
Length: 31 pages
Date of creation: Aug 2010
Date of revision:
Contact details of provider:
Postal: Øster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark
Phone: (0045) 35 32 30 54
Fax: +45 35 32 30 00
Web page: http://www.econ.ku.dk/cie/
More information through EDIRC
pharmaceutical markets; regulation; co-payments; reference pricing; asymmetric welfare effects;
Other versions of this item:
- Kaiser, Ulrich & Mendez, Susan J. & Rønde, Thomas, 2010. "Regulation of pharmaceutical prices: Evidence from a reference price reform in Denmark," ZEW Discussion Papers 10-062, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-11 (All new papers)
- NEP-COM-2010-09-11 (Industrial Competition)
- NEP-HEA-2010-09-11 (Health Economics)
- NEP-REG-2010-09-11 (Regulation)
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.:
- Saul Lach & Jose Luis Moraga-Gonzalez, 2009.
"Asymmetric Price Effects of Competition,"
Tinbergen Institute Discussion Papers
09-049/2, Tinbergen Institute.
- Kaiser, Ulrich & Wright, Julian, 2006.
"Price structure in two-sided markets: Evidence from the magazine industry,"
International Journal of Industrial Organization,
Elsevier, vol. 24(1), pages 1-28, January.
- Kaiser, Ulrich & Wright, Julian, 2004. "Price Structure in Two-sided Markets: Evidence from the Magazine Industry?," ZEW Discussion Papers 04-80, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Alexander Heuer & Malwina Mejer & Jennifer Neuhaus, 2007. "The National Regulation of Pharmaceutical Markets and the Timing of New Drug Launches in Europe," Kiel Advanced Studies Working Papers 437, Kiel Institute for the World Economy.
- Christopher R. Knittel & Victor Stango, 2003.
"Price Ceilings as Focal Points for Tacit Collusion: Evidence from Credit Cards,"
American Economic Review,
American Economic Association, vol. 93(5), pages 1703-1729, December.
- Christopher R. Knittel & Victor Stango, 2001. "Price ceilings as focal points for tacit collusion: evidence from credit cards," Working Paper Series WP-01-12, Federal Reserve Bank of Chicago.
- Aviv Nevo, 2000. "A Practitioner's Guide to Estimation of Random-Coefficients Logit Models of Demand," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 9(4), pages 513-548, December.
- Kaiser, Ulrich & Song, Minjae, 2009. "Do media consumers really dislike advertising? An empirical assessment of the role of advertising in print media markets," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 292-301, March.
- Marin C. Gemmill & Joan Costa-Font & Alistair McGuire, 2007. "In search of a corrected prescription drug Elasticity estimate: a meta-regression approach," Health Economics, John Wiley & Sons, Ltd., vol. 16(6), pages 627-643.
- Miraldo, Marisa, 2009. "Reference pricing and firms' pricing strategies," Journal of Health Economics, Elsevier, vol. 28(1), pages 176-197, January.
- Herr, A.; & Suppliet, M.;, 2011. "Co-Payment Exemptions and Reference Prices: an Empirical Study of Pharmaceutical Prices in Germany," Health, Econometrics and Data Group (HEDG) Working Papers 11/18, HEDG, c/o Department of Economics, University of York.
- Brekke, Kurt R. & Holmas, Tor Helge & Straume, Odd Rune, 2011.
"Reference pricing, competition, and pharmaceutical expenditures: Theory and evidence from a natural experiment,"
Journal of Public Economics,
Elsevier, vol. 95(7), pages 624-638.
- Brekke, Kurt R. & Holmas, Tor Helge & Straume, Odd Rune, 2011. "Reference pricing, competition, and pharmaceutical expenditures: Theory and evidence from a natural experiment," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 624-638, August.
- Kurt R. Brekke & Tor Helge Holmås & Odd Rune Straume, 2010. "Reference Pricing, Competition, and Pharmaceutical Expenditures: Theory and Evidence from a Natural Experiment," CESifo Working Paper Series 3258, CESifo Group Munich.
- Ivan Moreno-Torres, 2011. "What if there was a stronger pharmaceutical price competition in Spain? When regulation has a similar effect to collusion," Working Papers XREAP2011-02, Xarxa de Referència en Economia Aplicada (XREAP), revised May 2011.
- Koenig, Pamina & MacGarvie, Megan, 2011. "Regulatory policy and the location of bio-pharmaceutical foreign direct investment in Europe," Journal of Health Economics, Elsevier, vol. 30(5), pages 950-965.
- Ivan Moreno-Torres, 2011. "Generic drugs in Spain: price competition vs. moral hazard," Working Papers XREAP2011-04, Xarxa de Referència en Economia Aplicada (XREAP), revised May 2011.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Hoffmann).
If references are entirely missing, you can add them using this form.