Scandinavian Working Papers in Economics

Discussion Paper Series in Economics,
Norwegian School of Economics, Department of Economics

No 18/2010: Margins and Market Shares: Pharmacy Incentives for Generic Substitution.

Kurt Richard Brekke (), Tor Helge Holmås () and Odd Rune Straume ()
Additional contact information
Kurt Richard Brekke: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Tor Helge Holmås: Stein Rokkan Centre for Social Studies, Postal: Nygårdsgaten 5, , N-5015 Bergen, , Norway
Odd Rune Straume: University of Minho, Postal: Department of Economics/NIPE, , University of Minho, , Campus de Gualtar, , 4710-057 Braga, Portugal

Abstract: We study the impact of product margins on pharmacies’ incentive to promote generics instead of brand-names. First, we construct a theoretical model where pharmacies can persuade patients with a brand-name prescription to purchase a generic version instead. We show that pharmacies’substitution incentives are determined by relative margins and relative patient copayments. Second, we exploit a unique product level panel data set, which contains information on sales and prices at both producer and retail level. In the empirical analysis, we find a strong relationship between the margins of brand-names and generics and their market shares. In terms of policy implications, our results suggest that pharmacy incentives are crucial for promoting generic sales.

Keywords: Pharmaceuticals; Pharmacies; Generic Substitution.

JEL-codes: I11; I18; L13; L65

36 pages, July 7, 2010

Full text files 

DWSDownload.aspx?Fil...pers%2f2010%2f18.pdf PDF-file

Download statistics

Questions (including download problems) about the papers in this series should be directed to Synne Stormoen ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:nhheco:2010_018This page generated on 2025-04-12 11:50:51.