HUI Working Papers, HUI Research
Parallel Imports and Mandatory Substitution Reform - A Kick or A Muff for Price Competition in Pharmaceuticals?
() and Miyase Yesim Köksal
Abstract: What has been the effect of competition from parallel
imports on prices of locally-sourced onpatent drugs? Did the 2002 Swedish
mandatory substitution reform increase this competition? To answer these
questions, we carried out difference-in-differences estimation on monthly
data for a panel of all on-patent prescription drugs sold in Sweden during
the 40 months from January 2001 through April 2004. On average, facing
competition from parallel imports caused a 15-17% fall in price. While the
reform increased the effect of competition from parallel imports, it was
only by 0.9%. The reform, however, did increase the effect of therapeutic
competition by 1.6%.
Keywords: parallel imports; pharmaceutical drugs; price competition; reference pricing; therapeutic competition; (follow links to similar papers)
JEL-Codes: I11; L51; L65; (follow links to similar papers)
32 pages, April 1, 2011
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