Price and welfare effects of a pharmaceutical substitution reform

David Granlund ()
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David Granlund: The Swedish Retail Institute (HUI), Postal: Regeringsgatan 60, SE-103 29 Stockholm, Sweden

No 21, HUI Working Papers from HUI Research

Abstract: 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 of generic entry has on brand-name prices by a factor of ten. 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.

Keywords: drugs; generic competition; equivalent variarion; demand estimation (search for similar items in EconPapers)
JEL-codes: D40 I11 L65 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2009-04-07
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Published as Granlund, David, 'Price and welfare effects of a pharmaceutical substitution reform' in Journal of Health Economics, 2010, pages 856-865.

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:huiwps:0021

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