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Generic substitution. Micro evidence from register data in Norway

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The importance of prices, doctor and patient characteristics, and market institutions for the likelihood of choosing generic drugs instead of the more expensive original brand-name version were examined. Using an extensive dataset extracted from The Norwegian Prescription Database (NorPD) containing all prescriptions dispensed to individuals in February 2004 and 2006 on 23 different drugs (chemical substances) in Norway, we find strong evidence for the importance of both doctor and patient characteristics for the choice robabilities. The price difference between brand and generic versions and insurance coverage both affect generic substitution. Moreover, controlling for the retail chain affiliation of the dispensing pharmacy, we find that pharmacies play an important role in promoting generic substitution. In markets with more recent entry of generic drugs, the brand-name loyalty proves to be much stronger, giving less explanatory powerto our demand model. Length: 25 pages

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  • Dalen Gag Morten & Furu Kai & Locatelli Marilena & Strom Steinar, 2009. "Generic substitution. Micro evidence from register data in Norway," Department of Economics and Statistics Cognetti de Martiis. Working Papers 200901, University of Turin.
  • Handle: RePEc:uto:dipeco:200901
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    1. Richard G. Frank & David S. Salkever, 1997. "Generic Entry and the Pricing of Pharmaceuticals," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(1), pages 75-90, March.
    2. Dag Dalen & Steinar Strøm & Tonje Haabeth, 2006. "Price regulation and generic competition in the pharmaceutical market," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 7(3), pages 204-211, September.
    3. Ernst R. Berndt, 2002. "Pharmaceuticals in U.S. Health Care: Determinants of Quantity and Price," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 45-66, Fall.
    4. Brekke, Kurt R. & Grasdal, Astrid L. & Holms, Tor Helge, 2009. "Regulation and pricing of pharmaceuticals: Reference pricing or price cap regulation?," European Economic Review, Elsevier, vol. 53(2), pages 170-185, February.
    5. Regan, Tracy L., 2008. "Generic entry, price competition, and market segmentation in the prescription drug market," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 930-948, July.
    6. Coscelli, Andrea, 2000. "The Importance of Doctors' and Patients' Preferences in the Prescription Decision," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 349-369, September.
    7. Judith K. Hellerstein, 1998. "The Importance of the Physician in the Generic Versus Trade-Name Prescription Decision," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 108-136, Spring.
    8. Grabowski, Henry G & Vernon, John M, 1992. "Brand Loyalty, Entry, and Price Competition in Pharmaceuticals after the 1984 Drug Act," Journal of Law and Economics, University of Chicago Press, vol. 35(2), pages 331-350, October.
    9. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387, March.
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    1. Takizawa, Osamu & Urushihara, Hisashi & Tanaka, Shiro & Kawakami, Koji, 2015. "Price difference as a predictor of the selection between brand name and generic statins in Japan," Health Policy, Elsevier, vol. 119(5), pages 612-619.
    2. Marilena Locatelli & Steinar Strøm, 2015. "Longitudinal Analysis of Generic Substitution," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(3), pages 363-374, September.
    3. Kurt Brekke & Dag Dalen & Tor Holmås, 2014. "Diffusion of pharmaceuticals: cross-country evidence of anti-TNF drugs," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(9), pages 937-951, December.
    4. Gorecki, Paul K. & Nolan, Anne & Brick, Aoife & Lyons, Seán, 2012. "Pharmaceuticals Delivery in Ireland. Getting a Bigger Bang for the Buck," Research Series, Economic and Social Research Institute (ESRI), number RS24.
    5. Brick, Aoife & Gorecki, Paul K. & Nolan, Anne, 2013. "Ireland: Pharmaceutical Prices, Prescribing Practices and Usage of Generics in a Comparative Context," Research Series, Economic and Social Research Institute (ESRI), number RS32.

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