Effects of the German reference drug program on ex-factory prices of prescription drugs: a panel data approach

Boris Augurzky (), Silja Göhlmann, Stefan Greß and Jürgen Wasem
Additional contact information
Silja Göhlmann: RWI Essen, Essen, Germany, Postal: RWI Essen, Essen, Germany
Stefan Greß: University of Applied Sciences, Fulda, Germany, Postal: University of Applied Sciences, Fulda, Germany
Jürgen Wasem: University of Duisburg-Essen, Essen, Germany, Postal: University of Duisburg-Essen, Essen, Germany

Health Economics, 2009, vol. 18, issue 4, pages 421-436

Abstract: This paper examines effects of the German social health insurance system's reference drug program (RDP) for prescription drugs on ex-factory prices. Moreover, we analyze whether manufacturers adapt prices of their products that are not subject to reference pricing as a consequence of changes in reference prices of their products that are subject to reference pricing. We use econometric panel data methods based on a large panel data set of nearly all German prescription drugs on a monthly basis between October 1994 and July 2005. They provide information on ex-factory prices, reference prices, manufacturers, type of prescription drug, and market entries and exits. Our results show that there is no full price adjustment: A 1%-change in reference prices leads to a 0.3%-change in market prices. Price adjustment, however, is fast - it mostly happens in the first month. Furthermore, the first introduction of a reference price reduces market prices of the affected products by approximately 7%. Finally, we observe a significant time effect that is positive in the market without reference prices and negative in the market with reference prices. Copyright © 2008 John Wiley & Sons, Ltd.

Date: 2009
View list of references

Downloads: (external link)
http://hdl.handle.net/10.1002/hec.1376 Link to full text; subscription required (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:wly:hlthec:v:18:y:2009:i:4:p:421-436

Access Statistics for this article

Health Economics is edited by Alan Maynard, John Hutton and Andrew Jones

More articles in Health Economics from John Wiley & Sons, Ltd.
Series data maintained by Christopher F. Baum ().