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Drug Shortages: Empirical Evidence from France

Author

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  • Dubois, Pierre
  • Majewska, Gosia
  • Reig, Valentina

Abstract

Drug shortages are a problem widely documented around the world. We develop a simple method allowing to identify shortage events and their intensity using sales data at a national level. In the case of prescription drugs, shortages occur when the quantities supplied do not meet demand at regulated prices. Using sales data only, shortages that are driven by supply shocks affect only the lower distribution of sales quantities and can be identified using a demand prediction model estimated on sales observed above a given quantile threshold. We can then measure the likelihood and the magnitude of shortage events. We provide evidence that lower French prices increase the likelihood and magnitude of shortages in France. However, higher prices in the UK seem to have positive spillover effects on reducing the likelihood of shortages, while a negative one when shortages happen and there is competition for scarce resources internationally. Finally, we provide evidence on the heterogeneous effects of shortage reductions achievable through higher regulated prices in France.

Suggested Citation

  • Dubois, Pierre & Majewska, Gosia & Reig, Valentina, 2023. "Drug Shortages: Empirical Evidence from France," TSE Working Papers 23-1417, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:127947
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    References listed on IDEAS

    as
    1. 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.
    2. Ali Yurukoglu & Eli Liebman & David B. Ridley, 2017. "The Role of Government Reimbursement in Drug Shortages," American Economic Journal: Economic Policy, American Economic Association, vol. 9(2), pages 348-382, May.
    3. Daron Acemoglu & Joshua Linn, 2004. "Market Size in Innovation: Theory and Evidence from the Pharmaceutical Industry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(3), pages 1049-1090.
    4. Pierre Dubois & Olivier de Mouzon & Fiona Scott-Morton & Paul Seabright, 2015. "Market size and pharmaceutical innovation," RAND Journal of Economics, RAND Corporation, vol. 46(4), pages 844-871, October.
    5. Kyle Margaret, 2011. "Strategic Responses to Parallel Trade," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(2), pages 1-34, January.
    6. András Fittler & Róbert György Vida & Valter Rádics & Lajos Botz, 2018. "A challenge for healthcare but just another opportunity for illegitimate online sellers: Dubious market of shortage oncology drugs," PLOS ONE, Public Library of Science, vol. 13(8), pages 1-17, August.
    7. Christopher Stomberg, 2016. "Drug Shortages, Pricing, and Regulatory Activity," NBER Chapters, in: Measuring and Modeling Health Care Costs, pages 323-348, National Bureau of Economic Research, Inc.
    8. Christopher Stomberg, 2016. "Drug Shortages, Pricing, and Regulatory Activity," NBER Working Papers 22912, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Drug Shortages; Prices; Regulation; Econometrics.;
    All these keywords.

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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