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Pricing behaviour of pharmacies after market deregulation for OTC drugs: The case of Germany

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  • Stargardt, Tom
  • Schreyögg, Jonas
  • Busse, Reinhard

Abstract

Objective To examine the price reactions of German pharmacies to changes made to OTC drug regulations in 2004. Prior to these changes, regulations guaranteed identical prices in all German pharmacies.Methods Two years after market deregulation, 256 pharmacies were surveyed to determine the retail prices of five selected OTC drugs. A probit regression model was used to identify factors that increased the likelihood of price changes. In addition, 409 pharmacy consumers were interviewed to gather information on their knowledge of the regulatory changes and to better explain consumer behaviour.Results Data was collected on a total of 1215 prices. Two years after deregulation, 23.1% of the participating pharmacies had modified the price of at least one of the five OTCs included in our study. However, in total, only 7.5% of the prices differed from their pre-deregulation level. The probit model showed that population density and the geographic concentration of pharmacies were significantly associated with price changes. Interestingly, the association with the geographic concentration of pharmacies was negative. The consumer survey revealed that 47.1% of those interviewed were aware of the deregulation.Conclusions Our findings indicate that, two years after deregulation, very few pharmacies had made use of individual pricing strategies; price competition between pharmacies in Germany is thus taking place only a very small scale.

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  • Stargardt, Tom & Schreyögg, Jonas & Busse, Reinhard, 2007. "Pricing behaviour of pharmacies after market deregulation for OTC drugs: The case of Germany," Health Policy, Elsevier, vol. 84(1), pages 30-38, November.
    • Handle: RePEc:eee:hepoli:v:84:y:2007:i:1:p:30-38
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    1. Reinhard Busse & Tom Stargardt & Jonas Schreyögg, 2005. "Determining the “Health Benefit Basket” of the Statutory Health Insurance scheme in Germany," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 6(1), pages 30-36, November.
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    1. Jo, Wooyong & Nam, Hyoryung & Choi, Jeonghye, 2022. "Opening the OTC drug market: The effect of deregulation on retail pharmacy’s performance," International Journal of Research in Marketing, Elsevier, vol. 39(3), pages 847-866.
    2. Moura, Ana, 2021. "Essays in health economics," Other publications TiSEM c93abd22-fa4a-42a5-b172-d, Tilburg University, School of Economics and Management.
    3. Vogler, Sabine & Habimana, Katharina & Arts, Danielle, 2014. "Does deregulation in community pharmacy impact accessibility of medicines, quality of pharmacy services and costs? Evidence from nine European countries," Health Policy, Elsevier, vol. 117(3), pages 311-327.
    4. Matthias Stoll & Christian Kollan & Frank Bergmann & Johannes Bogner & Gerd Faetkenheuer & Carlos Fritzsche & Kirsten Hoeper & Heinz-August Horst & Jan van Lunzen & Andreas Plettenberg & Stefan Reuter, 2011. "Calculation of Direct Antiretroviral Treatment Costs and Potential Cost Savings by Using Generics in the German HIV ClinSurv Cohort," PLOS ONE, Public Library of Science, vol. 6(9), pages 1-12, September.
    5. Ana Moura & Pedro Pita Barros, 2020. "Entry and price competition in the over‐the‐counter drug market after deregulation: Evidence from Portugal," Health Economics, John Wiley & Sons, Ltd., vol. 29(8), pages 865-877, August.
    6. Andrea Cintolesi & Andrea Riganti, 2022. "Liberalizing the opening of new pharmacies and hospitalizations," Temi di discussione (Economic working papers) 1388, Bank of Italy, Economic Research and International Relations Area.

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