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Has the European Union Achieved a Single Pharmaceutical Market?

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  • Aysegul Timur
  • Gabriel Picone
  • Jeffrey S. DeSimone

Abstract

This paper explores price differences in the European Union (EU) pharmaceutical market, the EU's fifth largest industry. With the aim of enhancing quality of life along with industry competitiveness and R&D capability, many EU directives have been adopted to achieve a single EU-wide pharmaceutical market. Using annual 1994–2003 data on prices of molecules that treat cardiovascular disease, we examine whether drug price dispersion has indeed decreased across five EU countries. Hedonic regressions show that over time, cross-country price differences between Germany and three of the four other EU sample countries, France, Italy and Spain, have declined, with relative prices in all three as well as the fourth country, UK, rising during the period. We interpret this as evidence that the EU has come closer to achieving a single pharmaceutical market in response to increasing European Commission coordination efforts.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16261.

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Date of creation: Aug 2010
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Publication status: published as Aysegul Timur & Gabriel Picone & Jeffrey DeSimone, 2011. "Has the European union achieved a single pharmaceutical market?," International Journal of Health Care Finance and Economics, Springer, vol. 11(4), pages 223-244, December.
Handle: RePEc:nbr:nberwo:16261

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  1. Ellison, S & Cockburn, I & Griliches, A & Hausman, J, 1996. "Characteristics of Demand for Pharmaceutical Products : an Examination of four Cephalosporins," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 96-24, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Danzon, Patricia M. & Chao, Li-Wei, 2000. "Cross-national price differences for pharmaceuticals: how large, and why?," Journal of Health Economics, Elsevier, Elsevier, vol. 19(2), pages 159-195, March.
  3. Judith K. Hellerstein, 1998. "The Importance of the Physician in the Generic Versus Trade-Name Prescription Decision," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 108-136, Spring.
  4. F. M. Scherer, 1993. "Pricing, Profits, and Technological Progress in the Pharmaceutical Industry," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 7(3), pages 97-115, Summer.
  5. Ganslandt, Mattias & Maskus, Keith E., 2004. "Parallel imports and the pricing of pharmaceutical products: evidence from the European Union," Journal of Health Economics, Elsevier, Elsevier, vol. 23(5), pages 1035-1057, September.
  6. Kurt R. Brekke & Ingrid Königbauer & Odd Rune Straume, 2006. "Reference Pricing of Pharmaceuticals," CESifo Working Paper Series 1825, CESifo Group Munich.
  7. Kravis, Irving B & Lipsey, Robert E, 1969. "International Price Comparisons by Regression Methods," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 10(2), pages 233-46, June.
  8. Boris Augurzky & Silja Göhlmann & Stefan Gre� & Jürgen Wasem, 2009. "Effects of the German reference drug program on ex-factory prices of prescription drugs: a panel data approach," Health Economics, John Wiley & Sons, Ltd., vol. 18(4), pages 421-436.
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Cited by:
  1. Birg, Laura, 2013. "Externalities of national pharmaceutical policy when markets are integrated through parallel trade," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79720, Verein für Socialpolitik / German Economic Association.

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