Reforming the Swedish pharmaceuticals market : Consequences for costs per defined daily dose

• In 2009 and 2010, the Swedish pharmaceuticals market was reformed. One of the stated policy goals was to achieve low costs for pharmaceutical products dispensed in Sweden. We use price and sales data for off-patent brand-name and generic pharmaceuticals to estimate a log-linear regression model, allowing us to assess how the policy changes affected the cost per defined daily dose. The estimated effect is an 18 % cost reduction per defined daily dose at the retail level and a 34 % reduction in the prices at the wholesale level (pharmacies’ purchase prices). The empirical results suggest that the cost reductions were caused by the introduction of a price cap, an obligation to dispense the lowest-cost generic substitute available in the whole Swedish market, and the introduction of well-defined exchange groups. The reforms thus reduced the cost per defined daily dose for consumers while being advantageous also for the pharmacies, who saw their retail margins increase. However, pharmaceutical firms supplying off-patent pharmaceuticals experienced a clear reduction in the price received for their products.

Subject headings

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Economics (hsv//eng)

MEDICIN OCH HÄLSOVETENSKAP  -- Hälsovetenskap -- Hälso- och sjukvårdsorganisation, hälsopolitik och hälsoekonomi (hsv//swe)

MEDICAL AND HEALTH SCIENCES  -- Health Sciences -- Health Care Service and Management, Health Policy and Services and Health Economy (hsv//eng)

Keyword

Pharmaceutical industry

National pharmacy monopoly

Pharmacy deregulation

Competition

Generics

Pricing

Complex Systems – Microdata Analysis

Komplexa system - mikrodataanalys

nationalekonomi

Publication and Content Type

ref (subject category)

art (subject category)