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Regional Purchasing Groups and Hospital Medicine Prices: Evidence from Group Creations

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  • Toulemon, L.;

Abstract

This paper estimates the impact of group purchasing on medicine prices in French hospitals, taking advantage of the entry of hospitals into regional purchasing groups between 2009 and 2014. I use a new database providing the average annual prices paid for all innovative and costly medicines in public hospitals. Using a fixed effects model that controls for hospitals’ medicine-specific bargaining abilities and medicine-specific price trends, I find that group purchasing reduces prices of medicines in oligopoly markets, but has no impact on the prices of medicines with no competitors.

Suggested Citation

  • Toulemon, L.;, 2017. "Regional Purchasing Groups and Hospital Medicine Prices: Evidence from Group Creations," Health, Econometrics and Data Group (HEDG) Working Papers 17/21, HEDG, c/o Department of Economics, University of York.
    • Handle: RePEc:yor:hectdg:17/21
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    References listed on IDEAS

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    1. Matthew Grennan, 2013. "Price Discrimination and Bargaining: Empirical Evidence from Medical Devices," American Economic Review, American Economic Association, vol. 103(1), pages 145-177, February.
    2. Varian, Hal R., 1989. "Price discrimination," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 10, pages 597-654, Elsevier.
    3. Sorenson, Corinna & Kanavos, Panos, 2011. "Medical technology procurement in Europe: A cross-country comparison of current practice and policy," Health Policy, Elsevier, vol. 100(1), pages 43-50, April.
    4. Kenneth S. Corts, 1998. "Third-Degree Price Discrimination in Oligopoly: All-Out Competition and Strategic Commitment," RAND Journal of Economics, The RAND Corporation, vol. 29(2), pages 306-323, Summer.
    5. Albane Degrassat-Théas & M. Bensadon & C. Rieu & M. Angalakuditi & C. Pen & P. Paubel, 2012. "Hospital Reimbursement Price Cap for Cancer Drugs," PharmacoEconomics, Springer, vol. 30(7), pages 565-573, July.
    6. Matthew Grennan, 2014. "Bargaining Ability and Competitive Advantage: Empirical Evidence from Medical Devices," Management Science, INFORMS, vol. 60(12), pages 3011-3025, December.
    7. Stole, Lars A., 2007. "Price Discrimination and Competition," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 34, pages 2221-2299, Elsevier.
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    Cited by:

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    More about this item

    Keywords

    hospital medicine prices; purchasing groups; bargaining ability;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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