The Effects of Price Regulation on Pharmaceutical Expenditure and Availability

Mika Kortelainen, Jaakko Markkanen, Otto Toivanen and Markku Siikanen

No 18497, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Quasi-experimental evidence on the effectiveness of price regulation policies in curbing pharmaceutical expenditure is scarce. We analyze widely utilized generic substitution and reference price policies using data from the Nordic countries. Constructing treatment and control groups by matching data across countries by active ingredients and employing difference-in-difference methods on market-level observations, we find that expenditure per dose decreases by 40% moving from the laxest to the strictest regime. Prices decrease less: Reallocation of demand to cheaper products likely explains the difference. We find no adverse effects on pharmaceutical availability and non-existent or positive quantity effects.

Keywords: pharmaceutical expenditure; pharmaceutical pricing; generic competition; reference pricing; Regulation (search for similar items in EconPapers)
JEL-codes: C23 H51 I11 I18 L51 L65 (search for similar items in EconPapers)
Date: 2023-10
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Working Paper: The Effects of Price Regulation on Pharmaceutical Expenditure and Availability (2023)
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