Reference pricing, competition, and pharmaceutical expenditures : theory and evidence from a natural experiment

Detalhes bibliográficos
Autor(a) principal: Brekke, Kurt R.
Data de Publicação: 2011
Outros Autores: Holmås, Tor Helge, Straume, Odd Rune
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
Texto Completo: http://hdl.handle.net/1822/11958
Resumo: We study the impact of regulation on competition between brand-names and generics and pharmaceutical expenditures using a unique policy experiment in Norway, where reference pricing (RP) replaced price cap regulation in 2003 for a sub-sample of off-patent products. First, we construct a vertical differentiation model to analyze the impact of regulation on prices and market shares of brand-names and generics. Then, we exploit a detailed panel data set at product level covering several off-patent molecules before and after the policy reform. Off-patent drugs not subject to RP serve as our control group. We find that RP significantly reduces both brand-name and generic prices, and results in significantly lower brand-name market shares. Finally, we show that RP has a strong negative effect on average molecule prices, suggesting significant cost-savings, and that patients’ copayments decrease despite the extra surcharges under RP.
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spelling Reference pricing, competition, and pharmaceutical expenditures : theory and evidence from a natural experimentPharmaceuticalsRegulationGeneric competitionSocial SciencesWe study the impact of regulation on competition between brand-names and generics and pharmaceutical expenditures using a unique policy experiment in Norway, where reference pricing (RP) replaced price cap regulation in 2003 for a sub-sample of off-patent products. First, we construct a vertical differentiation model to analyze the impact of regulation on prices and market shares of brand-names and generics. Then, we exploit a detailed panel data set at product level covering several off-patent molecules before and after the policy reform. Off-patent drugs not subject to RP serve as our control group. We find that RP significantly reduces both brand-name and generic prices, and results in significantly lower brand-name market shares. Finally, we show that RP has a strong negative effect on average molecule prices, suggesting significant cost-savings, and that patients’ copayments decrease despite the extra surcharges under RP.Fundação para a Ciência e a Tecnologia (FCT)ElsevierUniversidade do MinhoBrekke, Kurt R.Holmås, Tor HelgeStraume, Odd Rune2011-032011-03-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/1822/11958eng"Journal of Public Economics". ISSN 0047-2727.0047-272710.1016/j.jpubeco.2010.11.015info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-07-21T12:52:03Zoai:repositorium.sdum.uminho.pt:1822/11958Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T19:51:05.306588Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse
dc.title.none.fl_str_mv Reference pricing, competition, and pharmaceutical expenditures : theory and evidence from a natural experiment
title Reference pricing, competition, and pharmaceutical expenditures : theory and evidence from a natural experiment
spellingShingle Reference pricing, competition, and pharmaceutical expenditures : theory and evidence from a natural experiment
Brekke, Kurt R.
Pharmaceuticals
Regulation
Generic competition
Social Sciences
title_short Reference pricing, competition, and pharmaceutical expenditures : theory and evidence from a natural experiment
title_full Reference pricing, competition, and pharmaceutical expenditures : theory and evidence from a natural experiment
title_fullStr Reference pricing, competition, and pharmaceutical expenditures : theory and evidence from a natural experiment
title_full_unstemmed Reference pricing, competition, and pharmaceutical expenditures : theory and evidence from a natural experiment
title_sort Reference pricing, competition, and pharmaceutical expenditures : theory and evidence from a natural experiment
author Brekke, Kurt R.
author_facet Brekke, Kurt R.
Holmås, Tor Helge
Straume, Odd Rune
author_role author
author2 Holmås, Tor Helge
Straume, Odd Rune
author2_role author
author
dc.contributor.none.fl_str_mv Universidade do Minho
dc.contributor.author.fl_str_mv Brekke, Kurt R.
Holmås, Tor Helge
Straume, Odd Rune
dc.subject.por.fl_str_mv Pharmaceuticals
Regulation
Generic competition
Social Sciences
topic Pharmaceuticals
Regulation
Generic competition
Social Sciences
description We study the impact of regulation on competition between brand-names and generics and pharmaceutical expenditures using a unique policy experiment in Norway, where reference pricing (RP) replaced price cap regulation in 2003 for a sub-sample of off-patent products. First, we construct a vertical differentiation model to analyze the impact of regulation on prices and market shares of brand-names and generics. Then, we exploit a detailed panel data set at product level covering several off-patent molecules before and after the policy reform. Off-patent drugs not subject to RP serve as our control group. We find that RP significantly reduces both brand-name and generic prices, and results in significantly lower brand-name market shares. Finally, we show that RP has a strong negative effect on average molecule prices, suggesting significant cost-savings, and that patients’ copayments decrease despite the extra surcharges under RP.
publishDate 2011
dc.date.none.fl_str_mv 2011-03
2011-03-01T00:00:00Z
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv http://hdl.handle.net/1822/11958
url http://hdl.handle.net/1822/11958
dc.language.iso.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv "Journal of Public Economics". ISSN 0047-2727.
0047-2727
10.1016/j.jpubeco.2010.11.015
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv Elsevier
publisher.none.fl_str_mv Elsevier
dc.source.none.fl_str_mv reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
instacron:RCAAP
instname_str Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
instacron_str RCAAP
institution RCAAP
reponame_str Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
collection Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
repository.name.fl_str_mv Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
repository.mail.fl_str_mv
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