Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/316995 
Year of Publication: 
2025
Series/Report no.: 
ETLA Working Papers No. 123
Version Description: 
This Version: 15.4.2025 - First published: 31.12.2024
Publisher: 
The Research Institute of the Finnish Economy (ETLA), Helsinki
Abstract: 
I study the passthrough of regulated ad valorem pharmacy markups and reduced Value Added Tax (VAT) rates to pharmaceutical retail prices in Finland. My reduced form evidence shows that pharmaceutical manufacturers respond to a decrease in regulated pharmacy markups by increasing their wholesale prices. I estimate a structural model of pharmaceutical supply and demand using data from the Finnish statin market. My results show that manufacturers benefit significantly from existing pharmaceutical tax subsidies, making them an expensive way to support poorer patients.
Subjects: 
Pharmaceuticals
Passthrough
Price regulation
Commodity taxation
Market power
JEL: 
I11
H22
H25
H51
L51
C23
Document Type: 
Working Paper

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