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The impact of generic substitution on price competition in Finland

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Abstract

Generic substitution by pharmacists was introduced in April 2003 in Finnish pharmaceutical markets. This article examines the impact of generic substitution on price development. This study examined all of the 2,100 substitutable drugs in Finland. The impact of generic substitution on price competition was significant. The average price of substitutable drugs decreased by more than 10%. However, the price development was uneven; some prices increased whereas others decreased by more than 50%. The most important factors that influenced the price development were the number of competitors, whether the drug was originator or generic and the width of the price band.

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Notes

  1. Typically, substitutable drugs are sold only with prescription. However, it is possible to buy some drugs, for example, quite mild dosages of some active ingredients like ibuprofen and ranitidine, without prescription.

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Acknowledgements

This study was conducted while the author worked as Head of Research for the National Consumer Research Centre (Finland) and Professor of Pharmacoeconomics at the University of Helsinki (Finland). The research did not receive external funding. The author thanks Alan Lyles and Simon Bell for their helpful comments and Paavo Saarinen for data assistance. The author is grateful to the Association of Finnish Pharmacies and the National Agency of Medicines (Finland) for providing the data sets for the research. The author has no conflicts of interest directly relevant to the content of the study.

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  1. Faculty of Pharmacy, University of Helsinki, P.O. Box 56, 00014, Helsinki, Finland

    Ville Aalto-Setälä

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  1. Ville Aalto-Setälä
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Correspondence to Ville Aalto-Setälä.

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Aalto-Setälä, V. The impact of generic substitution on price competition in Finland. Eur J Health Econ 9, 185–191 (2008). https://doi.org/10.1007/s10198-007-0059-0

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