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The Norwegian market for pharmaceuticals and the non-mandatory substitution reform of 2001: the case of enalapril

Author

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  • Razzolini, Tiziano

    (The Ragnar Frisch Centre for Economic Research)

Abstract

A new demand model which accounts for the effect of the age of drugs on pharmaceutical demand is provided. Within this framework the problem of persistence in consumption of original branded drugs and a particular case of intra-molecular substitution are analyzed. I find that interacting price with time in a logit demand structure provides intuitive patterns of substitution between branded and generic drugs and yields, with an assumption of Bertrand-Nashequilibrium on the supply side, intuitive dynamics of the mark-ups for generic manufacturers over time. The effect of a non-mandatory substitution reform introduced in Norway in March 2001 is analyzed in terms of increased sensitivity to price and is found to be negligible. The presence of competition between generic producers is also verified.

Suggested Citation

  • Razzolini, Tiziano, 2004. "The Norwegian market for pharmaceuticals and the non-mandatory substitution reform of 2001: the case of enalapril," Memorandum 12/2004, Oslo University, Department of Economics.
    • Handle: RePEc:hhs:osloec:2004_012
    as

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    File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2004/Memo-12-2004.pdf
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    References listed on IDEAS

    as
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    2. Paul Ellickson & Scott Stern & Manuel Trajtenberg, 2001. "Patient Welfare and Patient Compliance -- An Empirical Framework for Measuring the Benefits from Pharmaceutical Innovation," NBER Chapters, in: Medical Care Output and Productivity, pages 539-564, National Bureau of Economic Research, Inc.
    3. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Generic substitution; off-patent; branded drugs;
    All these keywords.

    JEL classification:

    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • P36 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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