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ON THE DEMAND FOR PRESCRIPTION DRUGS: HETEROGENEITY IN PRICE RESPONSES
Author(s) -
Skipper Niels
Publication year - 2013
Publication title -
health economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.55
H-Index - 109
eISSN - 1099-1050
pISSN - 1057-9230
DOI - 10.1002/hec.2864
Subject(s) - price elasticity of demand , economics , subsidy , medical prescription , danish , payment , purchasing , elasticity (physics) , population , public economics , econometrics , microeconomics , medicine , pharmacology , environmental health , finance , linguistics , philosophy , operations management , materials science , composite material , market economy
This paper estimates the price elasticity of demand for prescription drugs using an exogenous shift in consumer co‐payment caused by a reform in the Danish subsidy scheme for the general public. Using purchasing records for the entire Danish population, I show that the average price response for the most commonly used drug yields demand elasticities in the range of –0.36 to –0.5. The reform is shown to affect women, the elderly, and immigrants the most. Furthermore, this paper shows significant heterogeneity in the price response over different types of antibiotics, suggesting that the price elasticity of demand varies considerably even across relatively similar drugs. Copyright © 2012 John Wiley & Sons, Ltd.