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Does Pharmaceutical Price Regulation Result in Greater Access to Essential Medicines? Study of the impact of drug price control order on sales volume of drugs in India

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  • Sahay, Arvind
  • Jaikumar, Saravana

Abstract

In this paper, we empirically examine whether price regulation of generic essential drugs in India results in social welfare (in terms of increase in sales volume post regulation). In 2013, the Indian government enacted the Drug Price Control (DPCO) which regulated the prices of essential medicines. Using historical monthly sales volume data, we identify the best fitting SARIMA (seasonal auto regressive integrated moving average) model for each of the 105 oral solid molecules included in DPCO 2013. Using these models and following the event study approach we statistically compare the baseline against the actual volume during event window. We find that while DPCO resulted in an increase in sales volume for few molecules, overall the regulation has resulted in a reduction in sales volume. On further analysis, we find that increasing the detailing efforts for molecules with high percentage sales in urban and semi-urban cities may likely result in positive DPCO impact. Our findings have significant policy and marketing implications.

Suggested Citation

  • Sahay, Arvind & Jaikumar, Saravana, 2016. "Does Pharmaceutical Price Regulation Result in Greater Access to Essential Medicines? Study of the impact of drug price control order on sales volume of drugs in India," IIMA Working Papers WP2016-02-01, Indian Institute of Management Ahmedabad, Research and Publication Department.
    • Handle: RePEc:iim:iimawp:14241
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    Cited by:

    1. Rupali Kumar & Mahika Milind Joshi & Rajat Jagdish Palod & Sreedhar Dharmagadda, 2022. "Does India need a new pharmaceutical policy? Examining the implications of the drug price control order," International Journal of Health Planning and Management, Wiley Blackwell, vol. 37(6), pages 3028-3038, November.

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