Do generic firms and the Spanish public purchaser respond to consumer price differences of generics under reference pricing?
OBJECTIVE
To assess the impact of competition on the consumer price and the average price paid by the National Health System (NHS) under reference pricing in the Spanish generic market.


METHODS
Descriptive analysis of the time trend in consumer prices before and after the application of reference pricing for the eight most sold active ingredients from 1997 to 2009.


RESULTS
The entry of a generic at a lower consumer price than that of the brand-name pharmaceutical or the first generic does not cause a voluntary reduction in the consumer price of either the brand drug or the first generic, either before or after the application of RP. Generic entry at a lower consumer price than previously existing pharmaceuticals always causes a slight reduction in the average price paid by the NHS; however, the average price paid by the NHS is always notably higher than the lowest, the difference being greater in relative terms under reference pricing.


CONCLUSIONS
The Spanish RP system results in very little consumer price competition between generic firms, price reduction thus being limited to regulatory measures. NHS purchases show little sensitivity to price differences between equivalent drugs priced at or below the reference price.
Puig-Junoy
Jaume
J
Research Centre for Health and Economics (CRES), Department of Economics and Business, Universitat Pompeu Fabra, Barcelona, Spain. jaume.puig@upf.edu
Moreno-Torres
Iván
I
D002755:Choice Behavior; D016208:Databases, Factual; D016568:Drugs, Generic / Q000191:economics*; D004465:Economic Competition / Q000191:economics*; D006801:Humans; D009313:National Health Programs / Q000191:economics*; D013030:Spain
D016568:Drugs, Generic