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Price cap regulation in the Colombian pharmaceutical market: An impact evaluation

Author

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  • David Bardey
  • Arturo Harker
  • Daniela Zuluaga

Abstract

We evaluate the impact of a price cap regulation implemented in the Colombian pharmaceutical market between 2011 and 2014. To do so, we take advantage of a unique data set where we observe three sources of variation: i) differences across eighteen groups in the Anatomical Therapeutic Chemical (ATC) classi cation system of the WHO, ii) the existence of regulated (treated) and unregulated (control) groups within each of these eighteen ATC groups, and iii) differences in time (before and after regulation) for the eighteen ATC groups. A triple differences model with fi xed time effects and cluster errors is used to identify the impact of this regulation. We fi nd that the price-cap regulation contributed to reduce prices in three of the eighteen groups and increase average prices for ten of them. We confi rm then that the focal point effect generated by a price-cap regulation can generate unintended distortions. More speci cally, our results reveal that the implementation of this price cap regulation potentially increased -public and private- expenditure by 30%, only for the 2,422 drugs in the eighteen ATC groups we study.

Suggested Citation

  • David Bardey & Arturo Harker & Daniela Zuluaga, 2021. "Price cap regulation in the Colombian pharmaceutical market: An impact evaluation," Documentos CEDE 19117, Universidad de los Andes, Facultad de Economía, CEDE.
    • Handle: RePEc:col:000089:019117
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    Cited by:

    1. 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).

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    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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