Pricing behaviour of pharmacies after market deregulation for OTC drugs: the case of Germany.
OBJECTIVE
To examine the price reactions of German pharmacies to changes made to OTC drug regulations in 2004. Prior to these changes, regulations guaranteed identical prices in all German pharmacies.


METHODS
Two years after market deregulation, 256 pharmacies were surveyed to determine the retail prices of five selected OTC drugs. A probit regression model was used to identify factors that increased the likelihood of price changes. In addition, 409 pharmacy consumers were interviewed to gather information on their knowledge of the regulatory changes and to better explain consumer behaviour.


RESULTS
Data was collected on a total of 1215 prices. Two years after deregulation, 23.1% of the participating pharmacies had modified the price of at least one of the five OTCs included in our study. However, in total, only 7.5% of the prices differed from their pre-deregulation level. The probit model showed that population density and the geographic concentration of pharmacies were significantly associated with price changes. Interestingly, the association with the geographic concentration of pharmacies was negative. The consumer survey revealed that 47.1% of those interviewed were aware of the deregulation.


CONCLUSIONS
Our findings indicate that, two years after deregulation, very few pharmacies had made use of individual pricing strategies; price competition between pharmacies in Germany is thus taking place only a very small scale.
Stargardt
Tom
T
Department of Health Care Management, Faculty of Economics and Management, Berlin University of Technology, Strasse des 17. Juni 145 EB2, 10623 Berlin, Germany. tom.stargardt@tu-berlin.de
Schreyögg
Jonas
J
Busse
Reinhard
R
D003132:Commerce / Q000191:economics*; D003625:Data Collection; D004465:Economic Competition / Q000191:economics; D005858:Germany; D033161:Government Regulation; D006801:Humans; D007880:Legislation, Drug; D009313:National Health Programs; D004366:Nonprescription Drugs / Q000008:administration & dosage / Q000191:economics*; D010593:Pharmaceutical Services / Q000191:economics*; D011057:Politics
D004366:Nonprescription Drugs