Squeezing the last drop out of your suppliers: an empirical study of market-based purchasing policies for generic pharmaceuticals

Mats A. Bergman (), David Granlund () and Niklas Rudholm ()
Additional contact information
Mats A. Bergman : Department of Economics, Södertörn University, Postal: Department of Economics, Södertörn University, 141 89 Huddinge, Sweden
David Granlund: Department of Economics, Umeå University, Postal: Department of Economics, Umeå University, S 901 87 Umeå, Sweden
Niklas Rudholm: Department of Economics, Postal: Dalarna University, SE-781 88 Borlänge, Sweden

No 921, Umeå Economic Studies from Umeå University, Department of Economics

Abstract: We study the effect of the degree of exclusivity for the lowest bidder on the average price of generic pharmaceuticals in the short and long terms. Our results indicate that a 1-percentage-point gain in market share of the lowest bidder reduces average costs by 0.3% in the short term and 0.8% in the long term, but also reduces the number of firms by 1%. We find that reducing the number of firms has a strong positive (and hence counteracting) effect on average prices, i.e., a 1% reduction raises prices by approximately 1%.

Keywords: Pharmaceutical industry; generic competition; generic drugs; brand-name drugs (search for similar items in EconPapers)
JEL-codes: D80 D83 I11 L65 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2016-02-02
New Economics Papers: this item is included in nep-hea
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.usbe.umu.se/digitalAssets/175/175781_ues921.pdf (application/pdf)

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: https://EconPapers.repec.org/RePEc:hhs:umnees:0921

Access Statistics for this paper

More papers in Umeå Economic Studies from Umeå University, Department of Economics Department of Economics, Umeå University, S-901 87 Umeå, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by David Skog ().