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Competition in prescription drug markets: is parallel trade the answer?

Kanavos, Panos and Vandoros, Sotiris (2010) Competition in prescription drug markets: is parallel trade the answer? Managerial and Decision Economics, 31 (5). pp. 325-338. ISSN 0143-6570

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Abstract

This article uses a price determination model with dynamic panel data estimation to examine the extent to which pharmaceutical parallel trade promotes price competition and leads to downward price convergence. Little evidence of sustainable price competition is found. We find that prices are mainly affected by regulation and by competition in the wholesale distribution chain; that the pricing strategy of parallel distributors resembles that of originator drugs in importing countries; and that there may be upward rather than downward price convergence. Drawing on the European evidence, the findings also indicate that opening the US market to parallel imports will not necessarily lead to competition and enhance pharmaceutical cost containment.

Item Type: Article
Official URL: http://eu.wiley.com/WileyCDA/WileyTitle/productCd-...
Additional Information: © 2010 John Wiley & Sons, Ltd.
Library of Congress subject classification: H Social Sciences > HF Commerce
R Medicine > RA Public aspects of medicine
Sets: Departments > Social Policy
Research centres and groups > LSE Health
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 04 Jan 2011 11:45
URL: http://eprints.lse.ac.uk/31019/

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