Effects of the German reference drug program on ex-factory prices of prescription drugs: a panel data approach
This paper examines effects of the German social health insurance system's reference drug program (RDP) for prescription drugs on ex-factory prices. Moreover, we analyze whether manufacturers adapt prices of their products that are not subject to reference pricing as a consequence of changes in reference prices of their products that are subject to reference pricing. We use econometric panel data methods based on a large panel data set of nearly all German prescription drugs on a monthly basis between October 1994 and July 2005. They provide information on ex-factory prices, reference prices, manufacturers, type of prescription drug, and market entries and exits. Our results show that there is no full price adjustment: A 1%-change in reference prices leads to a 0.3%-change in market prices. Price adjustment, however, is fast - it mostly happens in the first month. Furthermore, the first introduction of a reference price reduces market prices of the affected products by approximately 7%. Finally, we observe a significant time effect that is positive in the market without reference prices and negative in the market with reference prices. Copyright © 2008 John Wiley & Sons, Ltd.
Volume (Year): 18 (2009)
Issue (Month): 4 ()
|Contact details of provider:|| Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Danzon Patricia M. & Ketcham Jonathan D., 2004.
"Reference Pricing of Pharmaceuticals for Medicare: Evidence from Germany, the Netherlands, and New Zealand,"
Forum for Health Economics & Policy,
De Gruyter, vol. 7(1), pages 1-56, January.
- Patricia M. Danzon & Jonathan D. Ketcham, 2004. "Reference Pricing of Pharmaceuticals for Medicare: Evidence from Germany, the Netherlands, and New Zealand," NBER Chapters, in: Frontiers in Health Policy Research, Volume 7, pages 1-54 National Bureau of Economic Research, Inc.
- Patricia M. Danzon & Jonathan D. Ketcham, 2003. "Reference Pricing of Pharmaceuticals for Medicare: Evidence from Germany, the Netherlands and New Zealand," NBER Working Papers 10007, National Bureau of Economic Research, Inc.
- Schneeweiss, Sebastian, 2007. "Reference drug programs: Effectiveness and policy implications," Health Policy, Elsevier, vol. 81(1), pages 17-28, April.
- Nina Pavcnik, 2002. "Do Pharmaceutical Prices Respond to Potential Patient Out-of-Pocket Expenses?," RAND Journal of Economics, The RAND Corporation, vol. 33(3), pages 469-487, Autumn.
- Puig-Junoy, Jaume, 2007. "The impact of generic reference pricing interventions in the statin market," Health Policy, Elsevier, vol. 84(1), pages 14-29, November.
- Zweifel, Peter & Crivelli, Luca, 1996. "Price Regulation of Drugs: Lessons from Germany," Journal of Regulatory Economics, Springer, vol. 10(3), pages 257-273, November.
When requesting a correction, please mention this item's handle: RePEc:wly:hlthec:v:18:y:2009:i:4:p:421-436. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.