Generic Substitution - Micro Evidence from Register Data in Norway

26 Pages Posted: 19 Oct 2009

See all articles by Dag Morten Dalen

Dag Morten Dalen

BI Norwegian Business School - Department of Economics

Kari Furu

Norwegian Institute of Public Health

Marilena Locatelli

University of Turin - Department of Economics

Steinar Strøm

University of Oslo - Ragnar Frisch Centre for Economic Research; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: January 12, 2009

Abstract

The importance of prices, doctor and patient characteristics, and market institutions for the likelihood of choosing generic drugs instead of the more expensive original brand-name version were examined. Using an extensive dataset extracted from The Norwegian Prescription Database (NorPD) containing all prescriptions dispensed to individuals in February 2004 and 2006 on 23 different drugs (chemical substances) in Norway, we find strong evidence for the importance of both doctor and patient characteristics for the choice probabilities. The price difference between brand and generic versions and insurance coverage both affect generic substitution. Moreover, controlling for the retail chain affiliation of the dispensing pharmacy, we find that pharmacies play an important role in promoting generic substitution. In markets with more recent entry of generic drugs, the brand-name loyalty proves to be much stronger, giving less explanatory power to our demand model.

Keywords: Generic drugs, substitution, microdata, random utility model

JEL Classification: C35, I18, L65

Suggested Citation

Dalen, Dag Morten and Furu, Kari and Locatelli, Marilena and Strøm, Steinar, Generic Substitution - Micro Evidence from Register Data in Norway (January 12, 2009). U. of Torino Department of Economics Research Paper No. 1/2009-GE, Available at SSRN: https://ssrn.com/abstract=1488048 or http://dx.doi.org/10.2139/ssrn.1488048

Dag Morten Dalen (Contact Author)

BI Norwegian Business School - Department of Economics ( email )

N-0442 Oslo
Norway
+47 46410774 (Phone)

Kari Furu

Norwegian Institute of Public Health ( email )

PO Box 7000
St. Olavs plass
Oslo
Norway

Marilena Locatelli

University of Turin - Department of Economics ( email )

Lungo Dora Siena, 100A
Torino, 10156
Italy
+39 011 6703894 (Phone)
+39 011 6703895 (Fax)

HOME PAGE: http://www.de.unito.it/web/member/locatelli/personal-inf.htm

Steinar Strøm

University of Oslo - Ragnar Frisch Centre for Economic Research ( email )

Gaustadalleen 21
N-0317 Oslo
Norway

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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