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Generic drugs in Spain: price competition vs. moral hazard

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  • Ivan Moreno-Torres

    ()
    (Competition Authority of Catalonia (ACCO), Generalitat de Catalunya; Center for Research in Economics and Health (CRES), Universitat Pompeu Fabra; Governments and Markets (GiM-IREA), Universitat de Barcelona)

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    Abstract

    This paper examines competition between generic and brand-name drugs in the regulated Spanish pharmaceutical market. A nested logit demand model is specified for the three most consumed therapeutic subgroups in Spain: statins (anticholesterol), selective serotonin reuptake inhibitors (antidepressants) and proton pump inhibitors (antiulcers). The model is estimated with instrumental variables from a panel of monthly prescription data from 1999 to 2005. The dataset distinguishes between three different levels of patients’ copayments within the prescriptions and the results show that the greater the level of insurance that the patient has (and therefore the lower the patient’s copayment), the lower the proportion of generic prescriptions made by physicians. It seems that the low level of copayment has delayed the penetration of generics into the Spanish market. Additionally, the estimation of the demand model suggests that the substitution rules and promotional efforts associated with the reference pricing system have increased generic market share, and that being among the first generic entrants has an additional positive effect.

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    File URL: http://www.pcb.ub.edu/xreap/aplicacio/fitxers/XREAP2011-04.pdf
    File Function: First version, 2011
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    File URL: http://www.pcb.ub.edu/xreap/aplicacio/fitxers/XREAP2011-04.pdf
    File Function: Revised version, 2011
    Download Restriction: no

    Bibliographic Info

    Paper provided by Xarxa de Referència en Economia Aplicada (XREAP) in its series Working Papers with number XREAP2011-04.

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    Length: 59 pages
    Date of creation: May 2011
    Date of revision: May 2011
    Handle: RePEc:xrp:wpaper:xreap2011-04

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    Postal: Espai de Recerca en Economia, Facultat de Ciències Econòmiques i Empresarials, Universitat de Barcelona, c/ Tinent Coronel Valenzuela, 1-11, 08034 Barcelona
    Phone: +34+934039653
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    Web page: http://www.pcb.ub.edu/xreap
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    Related research

    Keywords: pharmaceutical industry; generic competition; copayment; moral hazard;

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    References

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