How Do Drug Prices Respond to a Change from External to Internal Reference Pricing? Evidence from a Danish Regulatory Reform

Ulrich Kaiser () and Susan Mendez

No 8759, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study the effects of a change in the way patient reimbursements are calculated on the prices of pharmaceuticals using quasi-experimental data for Denmark which switched from external (where reimbursements are based on prices of similar products in foreign countries) to internal reference pricing (where they are based on the cheapest domestic substitute). We analyze three therapeutic classes with different treatment durations and show that the reform led to substantial price decreases for our lifelong treatment and to less substantial price reductions for our medium duration treatment while we do not find significant effects on our acute treatment. Moreover, the reform did only affect generics and did not impact original products or parallel imports.

Keywords: pharmaceutical markets; regulation; reference pricing; treatment duration (search for similar items in EconPapers)
JEL-codes: C23 I18 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2015-01
New Economics Papers: this item is included in nep-reg
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Citations: View citations in EconPapers (1)

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Working Paper: How Do Drug Prices Respond to a Change from External to Internal Reference Pricing? Evidence from a Danish Regulatory Reform (2015)
Working Paper: How do drug prices respond to a change from external to internal reference pricing? Evidence from a Danish regulatory reform (2015)
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