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Price and welfare effects of a pharmaceutical substitution reform
Umeå University, Faculty of Social Sciences, Department of Economics.
2010 (English)In: Journal of Health Economics, ISSN 0167-6296, E-ISSN 1879-1646, Vol. 29, no 6, 856-865 p.Article in journal (Refereed) Published
Abstract [en]

The price effects of the Swedish pharmaceutical substitution reform are analyzed using data for a panel of all pharmaceutical product sold in Sweden in 1997-2007. The price reduction due to the reform was estimated to average 10% and was found to be significantly larger for brand-name pharmaceuticals than for generics. The results also imply that the reform amplified the effect that generic entry has on brand-name prices by a factor of 10. Results of a demand estimation imply that the price reductions increased total pharmaceutical consumption by 8% and consumer welfare by SEK 2.7 billion annually.

Place, publisher, year, edition, pages
2010. Vol. 29, no 6, 856-865 p.
Keyword [en]
drugs, generic competition, equivalent variation, demand estimation
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Research subject
URN: urn:nbn:se:umu:diva-37150DOI: 10.1016/j.jhealeco.2010.08.003ISI: 000284671600007OAI: diva2:358094
Available from: 2010-10-20 Created: 2010-10-20 Last updated: 2014-10-09Bibliographically approved

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