Scandinavian Working Papers in Economics
Umeå Economic Studies,
Umeå University, Department of Economics
No 709: Consumer Information and Pharmaceutical Prices: Theory and Evidence
David Granlund () and Niklas Rudholm ()
Additional contact information
David Granlund: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden
Niklas Rudholm: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden
Abstract: In this paper, the impact of increased consumer information on brand name and generic pharmaceutical prices is analyzed both theoretically and empirically. The theoretical results show that an increase in information is likely to reduce the price of brand name pharmaceuticals, while the results regarding generics are less clear. In the empirical part of the paper, the introduction of the substitution reform in the Swedish pharmaceuticals market in October 2002 is used as a natural experiment regarding the effects of increased consumer information on pharmaceutical prices. The results clearly show that the reform has lowered the price of both brand name- and generic pharmaceuticals.
Keywords: Pharmaceutical industry; generic competition; generic drugs; brand name drugs
32 pages, April 23, 2007
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