@techreport{Brekke2010Reference,
abstract = {We study the impact of regulation on competition between brand-names and generics and pharmaceutical expenditures using a unique policy experiment in Norway, where reference pricing (RP) replaced price cap regulation in 2003 for a sub-sample of off-patent products. First, we construct a vertical differentiation model to analyze the impact of regulation on prices and market shares of brand-names and generics. Then, we exploit a detailed panel data set at product level covering several off-patent molecules before and after the policy reform. Off-patent drugs not subject to RP serve as our control group. We find that RP significantly reduces both brand-name and generic prices, and results in significantly lower brand-name market shares. Finally, we show that RP has a strong negative effect on average molecule prices, suggesting significant cost-savings, and that patients' copayments decrease despite the extra surcharges under RP.},
address = {M\"{u}nchen},
author = {Kurt R. Brekke and Tor Helge Holm\aa{}s and Odd Rune Straume},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {I11; I18; L13; L65; 330; pharmaceuticals; regulation; generic competition; Pharmazeutisches Produkt; Staatliche Preispolitik; Preiswettbewerb; Produktdifferenzierung; Generika; Gesundheitskosten; Norwegen},
language = {eng},
number = {3258},
publisher = {CESifo},
title = {Reference pricing, competition, and pharmaceutical expenditures: Theory and evidence from a natural experiment},
type = {CESifo working paper: Industrial Organisation},
url = {http://hdl.handle.net/10419/46451},
year = {2010}
}
