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Janssen, A. & Granlund, D. (2023). The importance of the first generic substitution: Evidence from Sweden. Journal of Economic Behavior and Organization, 213, 1-25
Open this publication in new window or tab >>The importance of the first generic substitution: Evidence from Sweden
2023 (English)In: Journal of Economic Behavior and Organization, ISSN 0167-2681, E-ISSN 1879-1751, Vol. 213, p. 1-25Article in journal (Refereed) Published
Abstract [en]

We analyze changes in the willingness to substitute from prescribed pharmaceuticals to more affordable generic equivalents in response to the first experience with a substitution. Using Swedish individual-level data of prescribed and dispensed pharmaceuticals, we employ a dynamic event study and an instrumental variable approach to show that an initial substitution reduces the probability of opposing subsequent substitutions by 39 percentage points. We recommend that policy-makers target patients with a history of opposed substitution and offer additional discounts to promote substitution as long-term savings outweigh one-time costs.

Place, publisher, year, edition, pages
Elsevier, 2023
Keywords
Generic substitution, Health care costs, Pharmaceuticals
National Category
Economics
Identifiers
urn:nbn:se:umu:diva-212417 (URN)10.1016/j.jebo.2023.07.017 (DOI)2-s2.0-85165117827 (Scopus ID)
Funder
The Jan Wallander and Tom Hedelius FoundationTore Browaldhs stiftelse, P2016-0113:1
Available from: 2023-07-28 Created: 2023-07-28 Last updated: 2023-07-28Bibliographically approved
Granlund, D. (2022). Direct and indirect savings from parallel imports in Sweden. Health Economics Review, 12(1), Article ID 46.
Open this publication in new window or tab >>Direct and indirect savings from parallel imports in Sweden
2022 (English)In: Health Economics Review, E-ISSN 2191-1991, Vol. 12, no 1, article id 46Article in journal (Refereed) Published
Abstract [en]

Background: The aim was: i) to quantify the direct and indirect savings from parallel imports in Sweden during a period when sellers were forbidden from giving discounts to pharmacies, and ii) to study if the effects of competition from parallel imports on list prices became smaller in absolute size when sellers were allowed to give discounts to pharmacies.

Methods: We analyzed the monthly prices for 3068 products during 61 months when discounts were forbidden and for 2504 products during 84 months when discounts were allowed. The price effects were estimated using dynamic models that rendered lagged numbers of competitors into valid and strong instruments for the current values.

Results: When discounts were forbidden, parallel imports had a market share of 16% and were on average 9% cheaper than locally sourced drugs, which yielded a direct saving of 231 million Swedish kronor (SEK) (24 million EUR) per year. Also, parallel imports reduced the prices of products with the same substance by, on average, 6% in the long-term, which yielded indirect savings of 421 million SEK (44 million EUR) per year. In total, parallel imports reduced the cost for on-patent pharmaceuticals by 4%. When discounts were allowed, the average gap in list price between parallel imports and locally sourced products was reduced to 0.8%, and the list prices of locally sourced products were no longer significantly affected by competition from parallel imports.

Conclusion: When discounts were allowed, the savings of parallel imports through lower list prices were replaced by savings of pharmacies through secret discounts.

Place, publisher, year, edition, pages
BioMed Central (BMC), 2022
Keywords
Brand-name drugs, Parallel trade, Pharmaceutical industry, Pharmacies, Price competition
National Category
Economics
Identifiers
urn:nbn:se:umu:diva-199368 (URN)10.1186/s13561-022-00391-x (DOI)000849343600002 ()36044111 (PubMedID)2-s2.0-85137229220 (Scopus ID)
Funder
Swedish Competition Authority, 382/2018
Available from: 2022-11-03 Created: 2022-11-03 Last updated: 2023-11-07Bibliographically approved
Ching, A. T., Granlund, D. & Sundström, D. (2022). Quantifying the Zero-Price Effect in the Field: Evidence from Swedish Prescription Drug Choices. Journal of the association for consumer research, 7(2), 175-185
Open this publication in new window or tab >>Quantifying the Zero-Price Effect in the Field: Evidence from Swedish Prescription Drug Choices
2022 (English)In: Journal of the association for consumer research, ISSN 2378-1815, E-ISSN 2378-1823, Vol. 7, no 2, p. 175-185Article in journal (Refereed) Published
Abstract [en]

We use Swedish data on consumer choices of therapeutically equivalent drugs to measure the zero-price effect. The Swedish benefit scheme for prescription drugs is a tier system, where each patient’s copay share is a step function of his/her qualified accumulated expenditure and can ultimately drop to zero. The copay tier a patient falls into is exogenously determined by his/her health and drug needs. In any given month, a patient pays the copay share of the lowest priced drug, plus the price difference between the chosen drug and the lowest priced drug in the same therapeutically equivalent exchange group. Therefore, when consumers cross the threshold of the zero-copay tier, the net price for the lowest priced drug will switch from a small positive amount to zero. This unique quasi-random environment allows us to apply the regression discontinuity design to quantify the zero-price effect. We do so for the full sample, as well as for two subsamples that should be less affected by state dependence. Based on a linear (quadratic) specification, the estimated zero-price effect reduces choice shares of the noncheapest alternatives by 12% (13%), 39% (48%), and 23% (25%) in the full sample, new diagnoses sample, and switchers sample, respectively.

Place, publisher, year, edition, pages
University of Chicago Press, 2022
National Category
Economics
Identifiers
urn:nbn:se:umu:diva-193401 (URN)10.1086/718460 (DOI)000843059600007 ()2-s2.0-85126702448 (Scopus ID)
Funder
The Jan Wallander and Tom Hedelius FoundationTore Browaldhs stiftelse, 2016-0113:1
Available from: 2022-03-31 Created: 2022-03-31 Last updated: 2023-09-05Bibliographically approved
Granlund, D. (2022). The Price Effects of Competition from Parallel Imports and Therapeutic Alternatives: Using Dynamic Models to Estimate the Causal Effect on the Extensive and Intensive Margins. Review of Industrial Organization, 60, 63-92
Open this publication in new window or tab >>The Price Effects of Competition from Parallel Imports and Therapeutic Alternatives: Using Dynamic Models to Estimate the Causal Effect on the Extensive and Intensive Margins
2022 (English)In: Review of Industrial Organization, ISSN 0889-938X, E-ISSN 1573-7160, Vol. 60, p. 63-92Article in journal (Refereed) Published
Abstract [en]

This paper studies responses to competition with the use of dynamic models that distinguish between short- and long-term price effects. The dynamic models also allow lagged numbers of competitors to become valid and strong instruments for the current numbers, which enables studying the causal effects using flexible specifications. A first parallel trader is found to decrease prices of exchangeable products by 7% in the long term. On the other hand, prices do not respond to the first competitor that sells therapeutic alternatives; but competition from four or more competitors that sell on-patent therapeutic alternatives decreases prices by about 10% in the long term.

Place, publisher, year, edition, pages
Springer, 2022
Keywords
Brand-name drugs, Dynamic model, Parallel trade, Pharmaceutical industry, Price competition, Therapeutic competition
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-186858 (URN)10.1007/s11151-021-09834-x (DOI)000684477900003 ()2-s2.0-85112363834 (Scopus ID)
Funder
Swedish Competition Authority, 382/2018
Available from: 2021-08-24 Created: 2021-08-24 Last updated: 2022-08-30Bibliographically approved
Granlund, D. (2021). A New Approach to Estimating State Dependence in Consumers’ Brand Choices Applied to 762 Pharmaceutical Markets*. Journal of Industrial Economics, 69(2), 443-483
Open this publication in new window or tab >>A New Approach to Estimating State Dependence in Consumers’ Brand Choices Applied to 762 Pharmaceutical Markets*
2021 (English)In: Journal of Industrial Economics, ISSN 0022-1821, E-ISSN 1467-6451, Vol. 69, no 2, p. 443-483Article in journal (Refereed) Published
Abstract [en]

This article shows how state dependence effects can be estimated for many markets and with few assumptions by using data on how the shares of consumers buying specific products differ between those who bought the same product on their latest purchase occasion and those who did not. Using information regarding which product was cheapest when consumers made their last purchases as instrument, I estimate that state dependence increases the probability that consumers will buy the product they bought the last time by eight percentage points. This effect is larger for women and the elderly than for men and younger consumers.

Place, publisher, year, edition, pages
John Wiley & Sons, 2021
National Category
Economics
Identifiers
urn:nbn:se:umu:diva-186184 (URN)10.1111/joie.12266 (DOI)000672470200007 ()2-s2.0-85109379649 (Scopus ID)
Funder
The Jan Wallander and Tom Hedelius FoundationTore Browaldhs stiftelse, P2016‐0113:1
Available from: 2021-07-16 Created: 2021-07-16 Last updated: 2023-09-05Bibliographically approved
Granlund, D. (2021). Apotekens inköpspriser påverkas knappt av deras möjlighet att förhandla till sig rabatter. Ekonomisk Debatt, 49(1), 55-65
Open this publication in new window or tab >>Apotekens inköpspriser påverkas knappt av deras möjlighet att förhandla till sig rabatter
2021 (Swedish)In: Ekonomisk Debatt, ISSN 0345-2646, Vol. 49, no 1, p. 55-65Article in journal (Other academic) Published
Abstract [sv]

När apoteksmarknaden omreglerades fick läkemedelsbolag en möjlighet att ge apoteken rabatter på patentskyddade läkemedel. Regeringen hoppades att detta skulle stärka apotekens lönsamhet utan att medföra merkostnader för konsumenter och läkemedelsförmånen (prop. 2008/09:145). Jag beräknar att parallellimport före omregleringen gav besparingar på drygt 500 miljoner kronor per år i form av lägre listpriser. Detta är ungefär lika med Tandvårds- och läkemedelsförmånsverkets (TLV) uppskattning av de rabatter apoteken i genomsnitt fått per år efter omregleringen. Efter omregleringen leder dock inte parallellimport till signifikant lägre listpriser. Sammantaget verkar därmed omregleringen haft små effekter på apotekens faktiska inköpspriser för patentskyddade läkemedel. 

Place, publisher, year, edition, pages
Nationalekonomiska föreningen, 2021
National Category
Economics
Identifiers
urn:nbn:se:umu:diva-190441 (URN)
Available from: 2021-12-15 Created: 2021-12-15 Last updated: 2021-12-16Bibliographically approved
Granlund, D. & Zykova, Y. V. (2021). Can Private Provision of Primary Care Contribute to the Spread of Antibiotic Resistance?: A Study of Antibiotic Prescription in Sweden. PharmacoEconomics - Open, 5(2), 187-195
Open this publication in new window or tab >>Can Private Provision of Primary Care Contribute to the Spread of Antibiotic Resistance?: A Study of Antibiotic Prescription in Sweden
2021 (English)In: PharmacoEconomics - Open, ISSN 2509-4262, Vol. 5, no 2, p. 187-195Article in journal (Refereed) Published
Abstract [en]

Background: Growing rates of antibiotic resistance, caused by increasing antibiotic use, pose a threat by making antibiotics less effective in treating infections.

Objective: We aimed to study whether physicians working at privately and publicly owned health centres differed in the likelihood of prescribing antibiotics and choosing broad-spectrum over narrow-spectrum antibiotics.

Methods: To estimate the effect of ownership on the probability of a prescribed drug being an antibiotic, we analysed all 4.5 million prescriptions issued from 2011 to 2015 at primary health centres in Västerbotten, Sweden. We controlled for patient age, sex, number of prescriptions per patient, and month of prescription, and used a maximum likelihood logit estimator. We then analysed how ownership affected the likelihood of a prescribed antibiotic being broad spectrum. We also used aggregated data to estimate the impact of the number of private health centres on the number of antibiotic prescriptions per inhabitant and the proportion of broad-spectrum antibiotics.

Results: Holding other factors constant, private physicians were 6% more likely to prescribe antibiotics and 9% more likely to choose broad-spectrum antibiotics. An increase by one additional private health centre was positively associated with an increase in the number of antibiotic prescriptions per inhabitant and a higher proportion, although not significant, of broad-spectrum antibiotic prescriptions.

Conclusion: Our findings suggest that private physicians prescribe more antibiotics, especially broad-spectrum antibiotics, than public physicians. Therefore, it is crucial to provide health centres with incentives to follow guidelines for antibiotic prescription, especially when the level of private provision of primary healthcare is high.

Place, publisher, year, edition, pages
Springer, 2021
National Category
Health Care Service and Management, Health Policy and Services and Health Economy
Identifiers
urn:nbn:se:umu:diva-176878 (URN)10.1007/s41669-020-00234-7 (DOI)000583454400001 ()33098069 (PubMedID)2-s2.0-85093961023 (Scopus ID)
Funder
The Jan Wallander and Tom Hedelius Foundation
Available from: 2020-11-19 Created: 2020-11-19 Last updated: 2023-03-24Bibliographically approved
Granlund, D. & Sundström, D. (2018). Physicians prescribing originals causes welfare losses. Economics Letters, 170, 143-146
Open this publication in new window or tab >>Physicians prescribing originals causes welfare losses
2018 (English)In: Economics Letters, ISSN 0165-1765, E-ISSN 1873-7374, Vol. 170, p. 143-146Article in journal (Refereed) Published
Abstract [en]

We analyze 319,000 choices of medically equivalent drugs at Swedish pharmacies. The results show that patients dislike substitutions for the prescribed product and that this effect is larger when the prescribed product is an original. At the same time, patients have strong preferences to buy the cheapest generic product. This implies that patients in most cases buy the cheapest generic product and experience welfare losses when the physician has prescribed another product.

Place, publisher, year, edition, pages
Elsevier, 2018
Keywords
Doctors, Pharmaceuticals, Prescription drugs, Generic drugs, Welfare
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-150411 (URN)10.1016/j.econlet.2018.06.017 (DOI)000442065400035 ()2-s2.0-85048892762 (Scopus ID)
Funder
The Jan Wallander and Tom Hedelius Foundation, P2016-0113:1
Available from: 2018-08-07 Created: 2018-08-07 Last updated: 2023-03-23Bibliographically approved
Granlund, D. & Bergman, M. (2018). Price competition in pharmaceuticals: evidence from 1303 Swedish markets. Journal of Health Economics, 61, 1-12
Open this publication in new window or tab >>Price competition in pharmaceuticals: evidence from 1303 Swedish markets
2018 (English)In: Journal of Health Economics, ISSN 0167-6296, E-ISSN 1879-1646, Vol. 61, p. 1-12Article in journal (Refereed) Published
Abstract [en]

We study the short- and long-term price effects of the number of competing firms, using panel-data on 1303 distinct pharmaceutical markets for 78 months within a reference-price system. We use actual transaction prices in an institutional setting with little scope for non-price competition and where simultaneity problems can be addressed effectively. In the long term, the price of generics is found to decrease by 81% when the number of firms selling generics with the same strength, form and similar package size is increased from 1 to 10. Nearly only competition at this fine-grained level matters; the effect of firms selling other products with the same active substance, but with different package size, form, or strength, is only a tenths as large. Half of the price reductions take place immediately and 70% within three months. Also, prices of originals are found to react to competition, but far less and much slower.

Place, publisher, year, edition, pages
Elsevier, 2018
Keywords
Price competition, Dynamic, Adjustment, Pharmaceutical industry, Generic drugs, Brand-name drugs, Reference price, Generic substitution
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-150413 (URN)10.1016/j.jhealeco.2018.06.009 (DOI)000447106100001 ()30007260 (PubMedID)2-s2.0-85049755573 (Scopus ID)
Funder
Swedish Competition Authority, 395/2015
Available from: 2018-08-07 Created: 2018-08-07 Last updated: 2023-03-24Bibliographically approved
Granlund, D. & Rudholm, N. (2018). Risker och kostnader för prissamordningar på den svenska generikamarknaden. Umeå: Umeå universitet
Open this publication in new window or tab >>Risker och kostnader för prissamordningar på den svenska generikamarknaden
2018 (Swedish)Report (Other academic)
Abstract [sv]

Företag som ofta möter varandra på en eller flera marknader kan ibland genom att observera varandras tidigare priser lyckas samordna sina priser. Konkurrensen sätts då ur spel och priserna blir högre än de annars skulle ha varit. I denna rapport visar vi att den svenska generikamarknaden har många egenskaper som underlättar prissamordning, exempelvis att priserna kan ändras varje månad, att företagen lätt kan observera varandras priser, och att konkurrensen främst sker i en variabel, priser. Vi redogör även för empiriska resultat som indikerar att prissamordningar ibland förekommer på marknaden, samt att dessa då orsakar läkemedelsförmånen och konsumenterna betydande merkostnader. Dessa uppskatter vi till i storleksordningen 50 till 200 miljoner kronor per år.

Ett sätt att minska risken för prissamordning är att förlänga tiden mellan att företag kan observera konkurrenters priser och att de kan ändra sina egna priser. Det är sedan länge välkänt inom nationalekonomin att denna tid har en avgörande betydelse för risken för prissamordning. Tiden kan förlängas genom att priserna endast tillåts ändras exempelvis kvartalsvis eller halvårsvis och/eller genom att kräva att företagen meddelar sina priser längre tid i förväg innan prisperioderna börjar. En förlängning av prisperioderna till 3-6 månader skulle troligen ha mycket små oönskade effekter samtidigt som det skulle minska möjligheterna för företag att samordna sina priser. Sammantaget skulle därför en sådan förändring troligen minska läkemedelsförmånens och konsumenternas kostnader.

Ett annat sätt att minska risken för att företag samordnar sina priser är att sänka marknadsandelen för periodens vara genom att minska kraven att de förskrivna varorna byts ut på apoteken. Detta skulle öka betydelsen av andra faktorer än priset och göra det svårare för företag att över tid dela försäljningen lika, vilket minskar risken för prissamordning. En tidigare studie visar också att detta skulle leda till fler konkurrerande företag på marknaden, vilket även det minskar risken för att företag samordnar sina priser. En lägre marknadsandel för periodens vara skulle dock kunna leda till svagare konkurrens och ökade kostnader för läkemedel på marknader som inte påverkas av prissamordningar. För hela generikamarknaden skulle en liten sänkning av marknadsandelen för periodens vara kunna bli kostnadsneutral, men det är inte säkert att detta resultat håller om prisperioderna förlängs.

Place, publisher, year, edition, pages
Umeå: Umeå universitet, 2018. p. 40
Series
Umeå economic studies, ISSN 0348-1018 ; 958
Keywords
generiska läkemedel, prissamordning, priskonkurrens
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-150418 (URN)
Available from: 2018-08-07 Created: 2018-08-07 Last updated: 2018-08-07Bibliographically approved
Organisations
Identifiers
ORCID iD: ORCID iD iconorcid.org/0000-0003-4467-8676

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