David Granlund

Fixed budgets as a cost containment measure for pharmaceuticals.

In Västerbotten County, Sweden, there are two health centers which (in contrast to all other health centers in the region) bear strict responsibility over their pharmaceutical budget. This study examined whether the prices and quantities of pharmaceuticals prescribed by physicians working at these health centers differ significantly from those prescribed by physicians at health centers with open-ended budgets. Estimation results using matching methods, which allows us to compare similar patients at the different health centers, show that the introduction of fixed pharmaceutical budgets did not affect physicians’ prescription behavior, indicating that fixed budgets may not be an efficient measure to reduce costs. Another explanation is that the health centers under study already had taken measures to contain costs, making it hard to further reduce costs.

Public goods and optimal paternalism under present-biased preferences

This paper concerns the provision of a state-variable public good in a two-type model under present-biased consumer preferences. The preference for immediate gratification facing the high-ability type weakens the incentive to adjust public provision in response to the self-selection constraint.

The Effect of Health Care Expenditure on Sickness Absence

Increased health care expenditure could be used to improve quality of care or reduce waiting time and could therefore be expected to affect the health and sickness absence of a population. Still, based on data from a panel of Swedish municipalities, public health care expenditure was found to have no, or only a negligible effect on absence due to sickness or disability. The same result was obtained when separate estimates were done for men and women and for absence due to sickness and disability.

Inequality in mortality in Vietnam during a period of rapid transition

Vietnam has experienced rapid economic growth following the transition, which began in the mid 1980s, from a planned agriculture based economy to a more market orientated one. In this paper, the associations between socioeconomic variables and mortality for 41,000 adults in Northern Vietnam followed from January 1999 to March 2008 are estimated using Coxs proportionally hazard models. Also, we use decomposition techniques to investigate the relative importance of socioeconomic factors for explaining inequality in age-standardized mortality risk. The results confirm previously found negative associations between mortality and income and education, for both men and women. We also found that marital status, at least for men, explain a large and growing part of the inequality. Finally, estimation results for relative education variables suggest that there exist positive spillover effects of education, meaning that higher education of ones neighbors or spouse might reduce ones mortality risk.

The Effect of Pharmacies’ Right to Negotiate Discounts on the Market Share of Parallel Imported Pharmaceuticals

Abstract This paper analyzes how allowing pharmacies to negotiate discounts with parallel traders and producers affects the market share for parallel imports. Economic theory predicts that discount negotiations will promote products bought directly from the producers because producers have cost advantages, due to which they always underbid the marginal prices of parallel traders. A reform that allowed discount negotiations is found to reduce the market share for parallel imports by about 11 percentage points to reach 31%. The results clearly indicate that pharmacies have an important role in the choice between medically equivalent pharmaceuticals.

Squeezing the last drop out of your suppliers : An empirical study of market-based purchasing policies for generic pharmaceuticals

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 0.3% 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, i.e., a 1% reduction raises prices by approximately 1%.

Present-Biased Preferences and Publicly Provided Private Goods

This paper analyzes the welfare effects of a publicly provided private good with long-term consequences for individual well-being, in an economy where consumers have present-biased preferences due ...

Price competition in pharmaceuticals – Evidence from 1303 Swedish markets

We study the short- and long-term price effects of the number of competing firms, using panel-data on 1303 distinct pharmaceutical markets for 78 months within a reference-price system. We use actual transaction prices in an institutional setting with little scope for non-price competition and where simultaneity problems can be addressed effectively. In the long term, the price of generics is found to decrease by 81% when the number of firms selling generics with the same strength, form and similar package size is increased from 1 to 10. Nearly only competition at this fine-grained level matters; the effect of firms selling other products with the same active substance, but with different package size, form, or strength, is only a tenths as large. Half of the price reductions take place immediately and 70% within three months. Also, prices of originals are found to react to competition, but far less and much slower.

Public provision and cross-border health care

Abstract We study how the optimal public provision of health care depends on whether or not individuals have an option to seek publicly financed treatment in other regions. We find that, relative to the first-best solution, the government has an incentive to over-provide health care to low-income individuals. When cross-border health care takes place, this incentive is solely explained by that over-provision facilitates redistribution. The reason why more health care facilitates redistribution is that high-ability individuals mimicking low-ability individuals benefit the least from health care when health and labor supply are complements. Without cross-border health care, higher demand for health care among high-income individuals also contributes to the over-provision given that high-income individuals do not work considerably less than low-income individuals and that the government cannot discriminate between the income groups by giving them different access to health care.