Regulation of Pharmaceutical Prices: Evidence from a Reference Price Reform in Denmark

Ulrich Kaiser, Susan J. Méndez, Thomas Rønde, Hannes Ullrich

    Publikation: Working paperForskning

    Abstrakt

    Reference prices constitute a main determinant of patient health care reimbursement in many countries. We study the effects of a change from an “external” (based on a basket of prices in other countries) to an “internal” (based on comparable domestic products) reference price system. We find that while our estimated consumer compensating variation is small, the reform led to substantial reductions in list and reference prices as well as co-payments, and to sizeable decreases in overall producer revenues, health care expenditures, and copayments. These effects differ markedly between branded drugs, generics, and parallel imports with health care expenditures and producer revenues decreasing and co-payments increasing most for branded drugs. The reform also induced consumers to substitute from branded drugs – for which they have strong preferences – to generics and parallel imports.
    This substitution also explains the small increase in consumer welfare despite a substantial decrease in expenditures.
    OriginalsprogEngelsk
    UdgivelsesstedBonn
    UdgiverIZA
    Antal sider29
    StatusUdgivet - feb. 2013
    NavnIZA Discussion Paper
    Nummer7248

    Emneord

    • Pharmaceutical markets
    • Regulation
    • Co-payments
    • Reference pricing
    • Welfare effects

    Citationsformater