Competition in prescription drug markets: is parallel trade the answer?

Panos Kanavos, Sotiris Vandoros

Research output: Contribution to journalArticlepeer-review

22 Citations (Scopus)

Abstract

This article uses a price determination model with dynamic panel data estimation to examine the extent to which pharmaceutical parallel trade promotes price competition and leads to downward price convergence. Little evidence of sustainable price competition is found. We find that prices are mainly affected by regulation and by competition in the wholesale distribution chain; that the pricing strategy of parallel distributors resembles that of originator drugs in importing countries; and that there may be upward rather than downward price convergence. Drawing on the European evidence, the findings also indicate that opening the US market to parallel imports will not necessarily lead to competition and enhance pharmaceutical cost containment.
Original languageEnglish
Article numberN/A
Pages (from-to)325-338
Number of pages14
JournalMANAGERIAL AND DECISION ECONOMICS
Volume31
Issue number5
DOIs
Publication statusPublished - Jul 2010

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