TITLE:
Generic Substitution Effects on Firm Level Market Shares in the Finnish Beta Blocker Market 1997Q1-2007Q4
AUTHORS:
Mikael Linden
KEYWORDS:
Generic Substitution; Market Concentration; Inequality; Competition; Policy
JOURNAL NAME:
Modern Economy,
Vol.4 No.12,
December
27,
2013
ABSTRACT:
The firm level market structure of the Finnish beta blocker market
in the period from 1997Q1 to 2007Q4 is analyzed with data analysis and with
panel data regression methods. Four different market concentration measures are
used. Although drug prices have decreased in response to the
competition-enhancing generic substitution system which started on the 1st of
March 2003, the firms’ observed market shares in the market have not decreased
uniformly in the all market dimensions. At the drug substitution group level, policy
change has led to more equal group share distributions both for the nominal
sales shares and quantity sales shares compared to the pre-policy period. At
the whole market level, nominal firm sales shares of the largest firms have increased during
the policy era but quantity sales shares have declined. The results imply that
the dominant firms’ nominal sale shares are augmented with firm-specific drug
price setting power. The results challenge the European Union (EU) drug policy
targeted to increase competition in the drug markets.