IDEAS home Printed from https://ideas.repec.org/a/spr/hecrev/v14y2024i1d10.1186_s13561-024-00545-z.html
   My bibliography  Save this article

Which factor reduces pharmaceutical expenditure, number of entrants or price variance? Updated generic drug markets in South Korea

Author

Listed:
  • Kyung-Bok Son

    (Hanyang University)

Abstract

Background Introducing more generics has been a successful strategy for lowering pharmaceutical prices and expenditure. However, the effect of the strategy depends on the pricing schemes for generics. We aimed to update the South Korean generic markets in terms of effective competition, and to examine the effects of number of manufacturers and price variance on pharmaceutical expenditure. Methods We constructed balanced panel data provided by the Health Insurance Review and Assessment Service covering 726 reimbursed substances from 2019 to 2023. We developed original indicators to analyze the generic markets: the maximum-minimum price variance (MMPV) and the maximum-weighted price variance (MWPV). Panel regression with fixed and time-fixed effects was used. Results Over the study period, the number of manufacturers increased from 17.81 in 2019 to 20.98 in 2020 and then decreased to 18.70 in 2023. The MMPV increased from 204.70 in 2019 to 230.07 in 2022 and then decreased slightly to 225.34 in 2023. The MWPV increased from 59.70 in 2019 to 72.58 in 2023. Two types of segmented markets were noteworthy: low use of low-cost generics with sufficient manufacturers and high use of low-cost generics with insufficient manufacturers. In the fixed and time-fixed effects panel analyses, the MWPV presented a negative association with the number of manufacturers and a positive association with the MMPV. Conclusions A newly introduced tiered pricing scheme, designed to differentiate generic prices, was associated with a decrease in the number of manufacturers and an increase in price dispersion. The pricing schemes for generics should be designed with price variance in mind and limit the number of too many generics in South Korea.

Suggested Citation

  • Kyung-Bok Son, 2024. "Which factor reduces pharmaceutical expenditure, number of entrants or price variance? Updated generic drug markets in South Korea," Health Economics Review, Springer, vol. 14(1), pages 1-10, December.
    • Handle: RePEc:spr:hecrev:v:14:y:2024:i:1:d:10.1186_s13561-024-00545-z
    DOI: 10.1186/s13561-024-00545-z
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1186/s13561-024-00545-z
    File Function: Abstract
    Download Restriction: no
    File URL: https://libkey.io/10.1186/s13561-024-00545-z?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Annalisa Belloni & David Morgan & Valérie Paris, 2016. "Pharmaceutical Expenditure And Policies: Past Trends And Future Challenges," OECD Health Working Papers 87, OECD Publishing.
    2. Panos Kanavos & Joan Costa-Font & Elizabeth Seeley, 2008. "Competition in off-patent drug markets: Issues, regulation and evidence [‘Substitution laws, insurance coverage, and generic drug use’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 23(55), pages 500-544.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bence Kovács & Miklós Darida & Judit Simon, 2021. "Drugs Becoming Generics—The Impact of Genericization on the Market Performance of Antihypertensive Active Pharmaceutical Ingredients," IJERPH, MDPI, vol. 18(18), pages 1-20, September.
    2. Victoria Serra-Sastre & Simona Bianchi & Jorge Mestre-Ferrandiz & Phill O’Neill, 2021. "Does NICE influence the adoption and uptake of generics in the UK?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(2), pages 229-242, March.
    3. Serra-Sastre, Victoria & Bianchi, Simona & Mestre-Ferrandiz, Jorge & O’Neill, Phill, 2021. "Does NICE influence the adoption and uptake of generics in the UK?," LSE Research Online Documents on Economics 113639, London School of Economics and Political Science, LSE Library.
    4. Simon Pol & Paula Rojas Garcia & Fernando Antoñanzas Villar & Maarten J. Postma & Antoinette D. I. Asselt, 2021. "Health-Economic Analyses of Diagnostics: Guidance on Design and Reporting," PharmacoEconomics, Springer, vol. 39(12), pages 1355-1363, December.
    5. Pierre Dubois & Morten Sæthre, 2020. "On the Effect of Parallel Trade on Manufacturers' and Retailers' Profits in the Pharmaceutical Sector," Econometrica, Econometric Society, vol. 88(6), pages 2503-2545, November.
    6. Barrenho, Eliana & Halmai, Réka & Miraldo, Marisa & Tzintzun, Iván & Raïs Ali, Setti & Toulemon, Léa & Dupont, Jean-Claude K. & Rochaix, Lise, 2022. "Inequities in cancer drug development in terms of unmet medical need," Social Science & Medicine, Elsevier, vol. 302(C).
    7. Takizawa, Osamu & Urushihara, Hisashi & Tanaka, Shiro & Kawakami, Koji, 2015. "Price difference as a predictor of the selection between brand name and generic statins in Japan," Health Policy, Elsevier, vol. 119(5), pages 612-619.
    8. Christensen, Elisabeth & Hirsch, Niels Christian & Andersen, Jonas Valbjørn & Ehlers, Lars Holger, 2022. "The analogue substitution model: Introducing competition in the absence of generic substitution in Danish hospitals," Health Policy, Elsevier, vol. 126(9), pages 844-852.
    9. Vogler, Sabine & Zimmermann, Nina & de Joncheere, Kees, 2016. "Policy interventions related to medicines: Survey of measures taken in European countries during 2010–2015," Health Policy, Elsevier, vol. 120(12), pages 1363-1377.
    10. Ivan Moreno-Torres, 2011. "What if there was a stronger pharmaceutical price competition in Spain? When regulation has a similar effect to collusion," Working Papers XREAP2011-02, Xarxa de Referència en Economia Aplicada (XREAP), revised May 2011.
    11. Kwon, Hye-Young & Hong, Ji-Min & Godman, Brian & Yang, Bong-Min, 2013. "Price cuts and drug spending in South Korea: The case of antihyperlipidemic agents," Health Policy, Elsevier, vol. 112(3), pages 217-226.
    12. Katharina Elisabeth Fischer & Tom Stargardt, 2016. "The diffusion of generics after patent expiry in Germany," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(8), pages 1027-1040, November.
    13. Nazila Yousefi & Mahyar Polroudi Moghaddam & Gita Afsharmanesh & Farzad Peiravian, 2020. "Evaluation of efficiency enhancement in Iran Health Insurance Organization: a policy brief for pharmaceutical cost containment," International Journal of Health Planning and Management, Wiley Blackwell, vol. 35(6), pages 1503-1511, November.
    14. Fiorentini, Gianluca & Bruni, Matteo Lippi & Mammi, Irene, 2022. "The same old medicine but cheaper: The impact of patent expiry on physicians’ prescribing behaviour," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 37-68.
    15. Russo, Pierluigi & Carletto, Angelica & Németh, Gergely & Habl, Claudia, 2021. "Medicine price transparency and confidential managed-entry agreements in Europe: findings from the EURIPID survey," Health Policy, Elsevier, vol. 125(9), pages 1140-1145.
    16. Ahmadou M Jingi & Jean Jacques N Noubiap & Arnold Ewane Onana & Jobert Richie N Nansseu & Binhuan Wang & Samuel Kingue & André Pascal Kengne, 2014. "Access to Diagnostic Tests and Essential Medicines for Cardiovascular Diseases and Diabetes Care: Cost, Availability and Affordability in the West Region of Cameroon," PLOS ONE, Public Library of Science, vol. 9(11), pages 1-8, November.
    17. Kyung-Bok Son, 2020. "Is greater generic competition also linked to lower drug prices in South Korea?," Health Economics Review, Springer, vol. 10(1), pages 1-9, December.
    18. David Granlund & Miyase Koksal-Ayhan, 2015. "Parallel imports and a mandatory substitution reform: a kick or a muff for price competition in pharmaceuticals?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 16(9), pages 969-983, December.
    19. Kaiser, Ulrich & Mendez, Susan J. & Rønde, Thomas & Ullrich, Hannes, 2014. "Regulation of pharmaceutical prices: Evidence from a reference price reform in Denmark," Journal of Health Economics, Elsevier, vol. 36(C), pages 174-187.
    20. Iván Moreno-Torres & Jaume Puig-Junoy & Josep Raya, 2011. "The impact of repeated cost containment policies on pharmaceutical expenditure: experience in Spain," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 12(6), pages 563-573, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:hecrev:v:14:y:2024:i:1:d:10.1186_s13561-024-00545-z. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com/economics/journal/13561 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.