Price and welfare effects of a pharmaceutical substitution reform.
The price effects of the Swedish pharmaceutical substitution reform are analyzed using data for a panel of all pharmaceutical product sold in Sweden in 1997-2007. The price reduction due to the reform was estimated to average 10% and was found to be significantly larger for brand-name pharmaceuticals than for generics. The results also imply that the reform amplified the effect that generic entry has on brand-name prices by a factor of 10. Results of a demand estimation imply that the price reductions increased total pharmaceutical consumption by 8% and consumer welfare by SEK 2.7 billion annually.
Granlund
David
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The Swedish Retail Institute (HUI), 103 29 Stockholm, Sweden; Department of Economics, Umeå University, 901 87 Umeå, Sweden. david.granlund@econ.umu.se
D003132:Commerce; D016568:Drugs, Generic / Q000191:economics*; D004465:Economic Competition; D005252:Fees, Pharmaceutical / Q000639:trends*; D018166:Health Care Reform / Q000191:economics*; D006301:Health Services Needs and Demand; D006801:Humans; D012946:Social Welfare; D013548:Sweden
D016568:Drugs, Generic