Price regulation and generic competition in the pharmaceutical market
Dag Morten Dalen (),
Tonje Habeth and
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Dag Morten Dalen: Handelshøyskolen BI, Postal: N-0442 Oslo, Norway
Tonje Habeth: Handelshøyskolen BI, Postal: N-0442 Oslo, Norway
No 2006:1, HERO Online Working Paper Series from University of Oslo, Health Economics Research Programme
In March 2003 the Norwegian government implemented yardstick based price regulation schemes on a selection of drugs experiencing generic competition. The retail price cap, termed “index price”, on a drug (chemical substance) was set equal to the average of the three lowest producer prices on that drug, plus a fixed wholesale and retail margin. This is supposed to lower barriers of entry for generic drugs and to trigger price competition. Using monthly data over the period 1998-2004 for the 6 drugs (chemical entities) included in the index price system, we estimate a structural model enabling us to examine the impact of the reform on both demand and market power. Our results suggest that the index price helped to increase the market shares of generic drugs and succeeded in triggering price competition.
Keywords: Discrete choice; demand for pharmaceuticals; monopolistic competition; evaluation of yardstick based price regulation (search for similar items in EconPapers)
JEL-codes: C35 D43 I18 L11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-dcm, nep-hea, nep-mic, nep-mkt and nep-reg
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Journal Article: Price regulation and generic competition in the pharmaceutical market (2006)
Working Paper: Price regulation and generic competition in the pharmaceutical market (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:oslohe:2006_001
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