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The Effect of the Reference Price System on Prices of Medicinal Products

Author

Listed:
  • Romana Kajdiz

    (Agency for medicinal productand medical devices of the Republic of Slovenia, Slovenia)

  • Stefan Bojnec

    (University of Primorska, Slovenia)

Abstract

The reference price system in Slovenia is used with the aim of managing and reducing public expenditures for medicinal products. We aim to investigate whether the reference price system has had an effect on real price reductions for medicinal products. We present the reference price regulation system for medicinal products and empirically estimate the effect of price regulation on the development of real prices for medicinal products and its economic rationale. The main thesis that the nominal and real prices for medicinal products have declined during price regulation is revealed by the Laspeyres index and Wilcoxon signed ranks test, by confirming the existence of statistically significant differences in prices for medicinal products. Therefore, we adopt the alternative hypothesis that prices for medicinal products have declined during the price regulation system. The reference price regulation system, with an efficient use of medicinal products and their efficient supply, could have positive effects on management and reduction of public expenditure for medicinal products.

Suggested Citation

  • Romana Kajdiz & Stefan Bojnec, 2010. "The Effect of the Reference Price System on Prices of Medicinal Products," Management, University of Primorska, Faculty of Management Koper, vol. 5(1), pages 053-067.
  • Handle: RePEc:mgt:youmng:v:5:y:2010:i:1:p:053-067
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