Price regulation and generic competition in the pharmaceutical market

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Memorandum ; No. 2005,33

Classification and Topics

• Classification: Wirtschaft ; Multiple or Simultaneous Equation Models: Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Health: Government Policy; Regulation; Public Health ; Production, Pricing, and Market Structure; Size Distribution of Firms
• Subject: Discrete choice ; demand for pharmaceuticals ; monopolistic competition ; evaluation of yardstick based price regulation ; Pharmazeutisches Produkt ; Staatliche Preispolitik ; Generika ; Monopolistischer Wettbewerb ; Schätzung ; Norwegen ; Diskrete Entscheidung

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dalen, Dag Morten ; Strøm, Steinar ; Haabeth, Tonje
• Event: Veröffentlichung
• (who): University of Oslo, Department of Economics
• (where): Oslo
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/63092
• Last update: 10.03.2025, 11:45 AM CET