Squeezing the Last Drop Out of Your Suppliers: An Empirical Study of Market-Based Purchasing Policies for Generic Pharmaceuticals

• Autores: Mats A. Bergman, David Granlund, Niklas Rudholm
• Localización: Oxford bulletin of economics and statistics, ISSN 0305-9049, Vol. 79, Nº. 6, 2017, págs. 969-996
• Idioma: inglés
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• Resumen

  • We study the effect of the degree of exclusivity for the lowest bidder on the average price of generic pharmaceuticals in the short and long terms. Our results indicate that a 1-percentage-point gain in market share of the lowest bidder reduces average costs by 0.2% in the short term and 0.8% in the long term, but also reduces the number of firms by 1%. We find that reducing the number of firms has a strong positive (and hence counteracting) effect on average prices, a 1% reduction raising prices by approximately 1%.