Squeezing the last drop out of your suppliers: an empirical study of market-based purchasing policies for generic pharmaceuticals
2016 (English)Report (Other academic)
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.
Umeå economic studies, ISSN 0348-1018 ; 921
Pharmaceutical industry, generic competition, generic drugs, brand-name drugs
Research subject Economics
IdentifiersURN: urn:nbn:se:umu:diva-121231OAI: oai:DiVA.org:umu-121231DiVA: diva2:931632
FunderSwedish Competition Authority