Reforming the Swedish pharmaceuticals market: consequences for costs per defined daily dose

Mats A. Bergman, David Granlund and Niklas Rudholm ()
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Mats A. Bergman: Södertörn University
David Granlund: Umeå University
Niklas Rudholm: HUI Research

International Journal of Health Economics and Management, 2016, vol. 16, issue 3, No 1, 214 pages

Abstract: Abstract In 2009 and 2010, the Swedish pharmaceuticals market was reformed. One of the stated policy goals was to achieve low costs for pharmaceutical products dispensed in Sweden. We use price and sales data for off-patent brand-name and generic pharmaceuticals to estimate a log-linear regression model, allowing us to assess how the policy changes affected the cost per defined daily dose. The estimated effect is an 18 % cost reduction per defined daily dose at the retail level and a 34 % reduction in the prices at the wholesale level (pharmacies’ purchase prices). The empirical results suggest that the cost reductions were caused by the introduction of a price cap, an obligation to dispense the lowest-cost generic substitute available in the whole Swedish market, and the introduction of well-defined exchange groups. The reforms thus reduced the cost per defined daily dose for consumers while being advantageous also for the pharmacies, who saw their retail margins increase. However, pharmaceutical firms supplying off-patent pharmaceuticals experienced a clear reduction in the price received for their products.

Keywords: Pharmaceutical industry; National pharmacy monopoly; Pharmacy deregulation; Competition; Generics; Pricing (search for similar items in EconPapers)
JEL-codes: D80 D83 I11 L65 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10754-016-9186-4

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