Price cap regulation in the Colombian pharmaceutical market: An impact evaluation

David Bardey, Arturo Harker () and Daniela Zuluaga ()

No 19117, Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE

Abstract: We evaluate the impact of a price cap regulation implemented in the Colombian pharmaceutical market between 2011 and 2014. To do so, we take advantage of a unique data set where we observe three sources of variation: i) differences across eighteen groups in the Anatomical Therapeutic Chemical (ATC) classi cation system of the WHO, ii) the existence of regulated (treated) and unregulated (control) groups within each of these eighteen ATC groups, and iii) differences in time (before and after regulation) for the eighteen ATC groups. A triple differences model with fi xed time effects and cluster errors is used to identify the impact of this regulation. We fi nd that the price-cap regulation contributed to reduce prices in three of the eighteen groups and increase average prices for ten of them. We confi rm then that the focal point effect generated by a price-cap regulation can generate unintended distortions. More speci cally, our results reveal that the implementation of this price cap regulation potentially increased -public and private- expenditure by 30%, only for the 2,422 drugs in the eighteen ATC groups we study.

Keywords: Pharmaceutical market; Price cap regulation; Impact evaluation. (search for similar items in EconPapers)
JEL-codes: D02 H51 I13 I18 (search for similar items in EconPapers)
Pages: 42
Date: 2021-03-10
New Economics Papers: this item is included in nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:col:000089:019117

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