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A model for the Dutch pharmaceutical market

Author

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  • Erik Canton

    (CPB-Netherlands Bureau for Economic Policy Analysis, The Hague, Netherlands)

  • Ed Westerhout

Abstract

This paper develops a general-equilibrium model for the Dutch pharmaceutical market. The model derives the behaviour of patients, pharmacists, drug producers and parallel-importers from microeconomic principles and recognizes the interactions between the various actors. The latter is important since the general-equilibrium effects are sometimes at odds with intuition from a partial-equilibrium approach. A calibrated version of the model is used to evaluate the effects of various policy experiments on the bill for pharmaceutical care in the Netherlands. These experiments include an incentive policy to encourage cost-conscious drug distribution, an increase of copayments for pharmaceutical care, a reduction of trade barriers for parallel-importers, and market entry by producers of generic substitutes. Copyright © 1999 John Wiley & Sons, Ltd.

Suggested Citation

  • Erik Canton & Ed Westerhout, 1999. "A model for the Dutch pharmaceutical market," Health Economics, John Wiley & Sons, Ltd., vol. 8(5), pages 391-402.
  • Handle: RePEc:wly:hlthec:v:8:y:1999:i:5:p:391-402
    DOI: 10.1002/(SICI)1099-1050(199908)8:5<391::AID-HEC457>3.0.CO;2-7
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    References listed on IDEAS

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    1. Sara Ellison Fisher & Iain Cockburn & Zvi Griliches & Jerry Hausman, 1997. "Characteristics of Demand for Pharmaceutical Products: An Examination of Four Cephalosporins," RAND Journal of Economics, The RAND Corporation, vol. 28(3), pages 426-446, Autumn.
    2. John F. Helliwell, 1986. "Supply-Side Macro-economics," Canadian Journal of Economics, Canadian Economics Association, vol. 19(4), pages 597-625, November.
    3. Lee, ChoongSup, 1995. "Optimal medical treatment under asymmetric information," Journal of Health Economics, Elsevier, vol. 14(4), pages 419-441, October.
    4. N. Gregory Mankiw, 1987. "Consumer Spending and the After-Tax Real Interest Rate," NBER Chapters,in: The Effects of Taxation on Capital Accumulation, pages 53-68 National Bureau of Economic Research, Inc.
    5. Kees Folmer & Johnny Stevens & Frank Van Tulder & Ed Westerhout, 1997. "Towards an economic model of the Dutch health care sector," Health Economics, John Wiley & Sons, Ltd., vol. 6(4), pages 351-363.
    6. Fiona M. Scott Morton, 1997. "Entry Decisions in the Generic Pharmaceutical Industry," NBER Working Papers 6190, National Bureau of Economic Research, Inc.
    7. Blomqvist, Ake, 1991. "The doctor as double agent: Information asymmetry, health insurance, and medical care," Journal of Health Economics, Elsevier, vol. 10(4), pages 411-432.
    8. Schut, Frederick T. & Van Bergeijk, Peter A. G., 1986. "International price discrimination: The pharmaceutical industry," World Development, Elsevier, vol. 14(9), pages 1141-1150, September.
    9. Mooney, Gavin & Ryan, Mandy, 1993. "Agency in health care: Getting beyond first principles," Journal of Health Economics, Elsevier, vol. 12(2), pages 125-135, July.
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    Cited by:

    1. Ramesh Govindaraj & Gnanaraj Chellaraj, 2002. "The Indian Pharmaceutical Sector : Issues and Options for Health Sector Reform," World Bank Publications, The World Bank, number 15231, June.
    2. Christina M. L. Kelton & Robert P. Rebelein, 2007. "A General-Equilibrium Analysis of Public Policy for Pharmaceutical Prices," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(2), pages 285-318, April.
    3. Tamura, Masaoki, 2014. "Margin Rate Rule : A New Drug Pricing Policy in Japan," IIR Working Paper 14-03, Institute of Innovation Research, Hitotsubashi University.
    4. Ed Westerhout & K. Folmer, 2002. "Financing medical specialist services in the Netherlands; welfare implications of imperfect agency," CPB Discussion Paper 6, CPB Netherlands Bureau for Economic Policy Analysis.

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