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Squeezing the last drop out of your suppliers: an empirical study of market-based purchasing policies for generic pharmaceuticals
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Economics.ORCID iD: 0000-0003-4467-8676
2016 (English)Report (Other academic)
Abstract [en]

We study the effect of the degree of exclusivity for the lowest bidder on the average price of generic pharmaceuticals in the short and long terms. Our results indicate that a 1-percentage-point gain in market share of the lowest bidder reduces average costs by 0.3% in the short term and 0.8% in the long term, but also reduces the number of firms by 1%. We find that reducing the number of firms has a strong positive (and hence counteracting) effect on average prices, i.e., a 1% reduction raises prices by approximately 1%.

Place, publisher, year, edition, pages
2016. , 38 p.
Series
Umeå economic studies, ISSN 0348-1018 ; 921
Keyword [en]
Pharmaceutical industry, generic competition, generic drugs, brand-name drugs
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:umu:diva-121231OAI: oai:DiVA.org:umu-121231DiVA: diva2:931632
Funder
Swedish Competition Authority
Available from: 2016-05-30 Created: 2016-05-30 Last updated: 2016-05-30

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