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EU Enlargement, Parallel Trade and Price Competition in Pharmaceuticals: Has the Price Competition increased?
Umeå University, Faculty of Social Sciences, Department of Economics.
(English)In: The B.E. Journal of Economic Analysis and Policy, ISSN 1935-1682Article in journal (Refereed) Accepted
Abstract [en]

Given the cost of trade and availability of pharmaceuticals, the drivingforce for parallel trade is the price difference between the source (exporting) andthe destination (importing) country. An increase in the price difference or in theavailability of pharmaceuticals for parallel trade should increase price competitionin the destination country. Using 2003–2007 data from Sweden we investigatedwhether EU enlargement in 2004, when new countries with low pharmaceuticalprices joined the EU, increased competition from parallel imports. Drugs facingcompetition from parallel imports are found to have on average 19–22% lowerprices than they would have had if they had never faced such competition. The EUenlargement is, however, not found to have increased this effect, which might beexplained by derogations and changes in consumer perceptions of parallelimports.

Keyword [en]
EU enlargement, parallel trade, pharmaceuticals, price competition
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:umu:diva-113767OAI: oai:DiVA.org:umu-113767DiVA: diva2:889686
Funder
Swedish Competition Authority
Available from: 2015-12-28 Created: 2015-12-28 Last updated: 2015-12-28

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