Koskinen, Pharmaceutical expenditures, the reference price system and competition in the pharmaceutical market

Pharmaceutical prices and expenditures are discussed increasingly around the world. Different mechanisms, such as promoting competition, have been contemplated in an attempt to contain costs. In this, reference price systems have been a widely used method. This study aims to examine the impact of a generic reference price system on prices, market structure and competition, with a special focus on antipsychotics. Furthermore, the additional impact of reference pricing over and above the impact of previously implemented generic substitution is investigated. While price decreases were obtained, most of them resulted from pharmaceutical pricing regulations rather than effective competition. The generic market sector appears highly concentrated. Furthermore, the additional impact of reference pricing on previously implemented generic substitution remains modest.