IDEAS home Printed from https://ideas.repec.org/a/eee/socmed/v311y2022ics0277953622006189.html
   My bibliography  Save this article

Does price-cap regulation work for increasing access to contraceptives? Aggregate- and pharmacy-level evidence from Colombia

Author

Listed:
  • Andia, Tatiana
  • Mantilla, César
  • Morales, Álvaro
  • Ortiz, Santiago
  • Rodríguez-Lesmes, Paul

Abstract

Price caps through international reference pricing are widely used worldwide but not so commonly in over-the-counter markets. We study the short-term effects of a price cap regulation for oral contraceptives in Colombia, a market dominated by the presence of several branded generics with multiple active ingredients. Most of the regulated products were fourth-generation contraceptives, and the Colombian health benefits plan only covers second-generation ones, resulting in a de facto over-the-counter market. Our aim is to establish whether the regulation triggered a competitive response within and across product categories, by price levels and regulatory status. The panel data analysis of quarterly level data for 52 drugs (and 79 drugs in an expanded sample without transactions for some quarters) reveals a massive expansion of transactions, for the directly regulated products that were formerly the most expensive, and for the indirectly regulated (i.e., a regulated ingredient) among those with an intermediate price. Although this price reduction could have led to a crowd out of the publicly provided contraceptives, we show that this is not the case. Since the information system cannot trace the final consumers’ purchases, we complement our analysis with an audit study involving 213 pharmacies in Bogota. We find that the price reduction was effectively transmitted to the final consumers.

Suggested Citation

  • Andia, Tatiana & Mantilla, César & Morales, Álvaro & Ortiz, Santiago & Rodríguez-Lesmes, Paul, 2022. "Does price-cap regulation work for increasing access to contraceptives? Aggregate- and pharmacy-level evidence from Colombia," Social Science & Medicine, Elsevier, vol. 311(C).
  • Handle: RePEc:eee:socmed:v:311:y:2022:i:c:s0277953622006189
    DOI: 10.1016/j.socscimed.2022.115312
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0277953622006189
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.socscimed.2022.115312?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Currie, Janet & Lin, Wanchuan & Zhang, Wei, 2011. "Patient knowledge and antibiotic abuse: Evidence from an audit study in China," Journal of Health Economics, Elsevier, vol. 30(5), pages 933-949.
    2. Rau, Tomás & Sarzosa, Miguel & Urzúa, Sergio, 2021. "The children of the missed pill," Journal of Health Economics, Elsevier, vol. 79(C).
    3. Bardey, David & Harker, Arturo & Zuluaga, Daniela, 2021. "Price cap regulation in the Colombian pharmaceutical market: An impact evaluation," TSE Working Papers 21-1195, Toulouse School of Economics (TSE).
    4. John A. List, 2004. "The Nature and Extent of Discrimination in the Marketplace: Evidence from the Field," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 49-89.
    5. Bauhoff, Sebastian, 2012. "Do health plans risk-select? An audit study on Germany's Social Health Insurance," Journal of Public Economics, Elsevier, vol. 96(9-10), pages 750-759.
    6. Steven N. Wiggins & Robert Maness, 2004. "Price Competition in Pharmaceuticals: The Case of Anti-infectives," Economic Inquiry, Western Economic Association International, vol. 42(2), pages 247-263, April.
    7. Brekke, Kurt R. & Grasdal, Astrid L. & Holms, Tor Helge, 2009. "Regulation and pricing of pharmaceuticals: Reference pricing or price cap regulation?," European Economic Review, Elsevier, vol. 53(2), pages 170-185, February.
    8. Madden, J. M. & Quick, J. D. & Ross-Degnan, D. & Kafle, K. K., 1997. "Undercover careseekers: Simulated clients in the study of health provider behavior in developing countries," Social Science & Medicine, Elsevier, vol. 45(10), pages 1465-1482, November.
    9. Danzon, Patricia M & Chao, Li-Wei, 2000. "Does Regulation Drive out Competition in Pharmaceutical Markets?," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 311-357, October.
    10. Costa-Font, Joan & McGuire, Alistair & Varol, Nebibe, 2014. "Price regulation and relative delays in generic drug adoption," Journal of Health Economics, Elsevier, vol. 38(C), pages 1-9.
    11. Brekke, Kurt R. & Canta, Chiara & Straume, Odd Rune, 2016. "Reference pricing with endogenous generic entry," Journal of Health Economics, Elsevier, vol. 50(C), pages 312-329.
    12. Jishnu Das & Alaka Holla & Aakash Mohpal & Karthik Muralidharan, 2016. "Quality and Accountability in Health Care Delivery: Audit-Study Evidence from Primary Care in India," American Economic Review, American Economic Association, vol. 106(12), pages 3765-3799, December.
    13. Fritz von der Schulenburg & Sotiris Vandoros & Panos Kanavos, 2011. "The effects of drug market regulation on pharmaceutical prices in Europe: overview and evidence from the market of ACE inhibitors," Health Economics Review, Springer, vol. 1(1), pages 1-8, December.
    14. Abbott, Thomas III, 1995. "Price regulation in the pharmaceutical industry: Prescription or placebo?," Journal of Health Economics, Elsevier, vol. 14(5), pages 551-565, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brekke, Kurt R. & Canta, Chiara & Straume, Odd Rune, 2016. "Reference pricing with endogenous generic entry," Journal of Health Economics, Elsevier, vol. 50(C), pages 312-329.
    2. Mats A. Bergman & David Granlund & Niklas Rudholm, 2017. "Squeezing the Last Drop Out of Your Suppliers: An Empirical Study of Market-Based Purchasing Policies for Generic Pharmaceuticals," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 79(6), pages 969-996, December.
    3. Lagarde, Mylène & Blaauw, Duane, 2022. "Overtreatment and benevolent provider moral hazard: Evidence from South African doctors," Journal of Development Economics, Elsevier, vol. 158(C).
    4. Bergman, Mats & Granlund, David & Rudholm, Niklas, 2016. "Squeezing the last drop out of your suppliers: an empirical study of market-based purchasing policies for generic pharmaceuticals," HUI Working Papers 116, HUI Research.
    5. repec:nip:nipewp:06/2015 is not listed on IDEAS
    6. Kurt R. Brekke & Chiara Canta & Odd Rune StraumeAuthor-Email: o.r.straume@eeg.uminho.p, 2015. "Does Reference Pricing Drive Out Generic Competition in Pharmaceutical Markets? Evidence from a Policy Reform," NIPE Working Papers 6/2015, NIPE - Universidade do Minho.
    7. Xiaojie Yang & Li Liu & Yi Zheng & Xue Yang & Shanlin Sun, 2022. "Pricing Problems in the Pharmaceutical Supply Chain with Mixed Channel: A Power Perspective," Sustainability, MDPI, vol. 14(12), pages 1-20, June.
    8. Lagarde, Mylène & Blaauw, Duane, 2022. "Overtreatment and benevolent provider moral hazard: evidence from South African doctors," LSE Research Online Documents on Economics 115383, London School of Economics and Political Science, LSE Library.
    9. Granlund, David & Bergman, Mats A., 2018. "Price competition in pharmaceuticals – Evidence from 1303 Swedish markets," Journal of Health Economics, Elsevier, vol. 61(C), pages 1-12.
    10. Mujcic, Redzo & Frijters, Paul, 2013. "Still Not Allowed on the Bus: It Matters If You're Black or White!," IZA Discussion Papers 7300, Institute of Labor Economics (IZA).
    11. Bergman , Mats A. & Granlund, David & Rudholm, Niklas, 2016. "Squeezing the last drop out of your suppliers: an empirical study of market-based purchasing policies for generic pharmaceuticals," Umeå Economic Studies 921, Umeå University, Department of Economics.
    12. Hostenkamp, Gisela, 2013. "Do follow-on therapeutic substitutes induce price competition between hospital medicines? Evidence from the Danish hospital sector," Health Policy, Elsevier, vol. 111(1), pages 68-77.
    13. Chen, Chun & Dong, Weizhen & Shen, Jay J. & Cochran, Christopher & Wang, Ying & Hao, Mo, 2014. "Is the prescribing behavior of Chinese physicians driven by financial incentives?," Social Science & Medicine, Elsevier, vol. 120(C), pages 40-48.
    14. Lu, Fangwen, 2014. "Insurance coverage and agency problems in doctor prescriptions: Evidence from a field experiment in China," Journal of Development Economics, Elsevier, vol. 106(C), pages 156-167.
    15. Maria Vittoria Levati & Ivan Soraperra & Saba Yifredew, 2023. "How to Curb Over-The-Counter Sales of Antibiotics? Evidence from a Field Experiment in Ethiopia," Working Papers 10/2023, University of Verona, Department of Economics.
    16. 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.
    17. Felix C.H. Gottschalk, 2019. "Why prevent when it does not pay? Prevention when health services are credence goods," Health Economics, John Wiley & Sons, Ltd., vol. 28(5), pages 693-709, May.
    18. Brekke, Kurt R. & Holmås, Tor Helge & Straume, Odd Rune, 2015. "Price regulation and parallel imports of pharmaceuticals," Journal of Public Economics, Elsevier, vol. 129(C), pages 92-105.
    19. Verniers, Isabel & Stremersch, Stefan & Croux, Christophe, 2011. "The global entry of new pharmaceuticals: A joint investigation of launch window and price," International Journal of Research in Marketing, Elsevier, vol. 28(4), pages 295-308.
    20. Zamora, Paula & Mantilla, César & Blanco, Mariana, 2021. "Price discrimination in informal labor markets in Bogotá: an audit experiment during the 2018 FIFA World Cup," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 55, pages 1-6.
    21. Chen, Xu & Yang, Huan & Wang, Xiaojun, 2019. "Effects of price cap regulation on the pharmaceutical supply chain," Journal of Business Research, Elsevier, vol. 97(C), pages 281-290.

    More about this item

    Keywords

    Pharmacies; Pharmaceuticals; Drugs; Simulated clients; Contraceptive pills;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:socmed:v:311:y:2022:i:c:s0277953622006189. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/315/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.