The Effects of the Selected Medical Treatment Charge on Generic Drug Use A Supply-Pathway Analysis Using Medical Inpatient Care as the Comparison Group

Takumi Gotoh
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Takumi Gotoh: Osaka School of International Public Policy, the University of Osaka

No 26J011, OSIPP Discussion Paper from Osaka School of International Public Policy, Osaka University

Abstract: Price policies to promote generic drug use may have different effects across supply pathways. Previous studies show that patient and physician preferences, inertia in past choices, and pharmacy explanations about generic substitution affect switching, but little is known about how a common change in patient cost sharing affects outpatient medical care, dental care, and pharmacy dispensing differently. This study uses the selected medical treatment charge for long-listed originator drugs, introduced nationwide in Japan in October 2024, as a cost-sharing shock. Using monthly aggregate data from the Japan Health Insurance Association, disaggregated by prefecture, age group, therapeutic class, and other characteristics, I estimate difference-in-differences models of generic drug volume shares. Relative to medical inpatient care, which was not directly covered by the policy, generic shares rose by 2.3 percentage points in outpatient medical care, 2.5 points in dental care, and 1.9 points in pharmacy dispensing. The outpatient and dental estimates do not differ significantly, whereas the pharmacy estimate is significantly smaller. These findings suggest that cost-sharing incentives promote generic substitution, but their effectiveness depends on both the price gap and pathway-specific drug-selection processes.

JEL-codes: D12 I11 I18 L65 (search for similar items in EconPapers)
Pages: 24pages
Date: 2026-09
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