Open AccessBiosimilar bidding in centralized tenders in Norway
Author(s) -
Dag Morten Dalen,
Steinar Strøm,
Marilena Locatelli
Publication year - 2021
Publication title -
nordic journal of health economics
Language(s) - English
Resource type - Journals
eISSN - 1892-9729
pISSN - 1892-9710
DOI - 10.5617/njhe.7394
Subject(s) - biosimilar , call for bids , bidding , competition (biology) , business , norwegian , market share , industrial organization , market competition , marketing , economics , medicine , procurement , market economy , ecology , linguistics , philosophy , biology
Our objective is to study the competition effect of biosimilar entry in centralized tenders for an expensive category or drugs - TNF-inhibitors. We use monthly observations of prices and volumes for all brands and biosimilars in this drug category in Norway, covering the period from Jan. 2006 to Dec. 2016. Descriptive statistics and regression models are used to investigate the impact of biosimilars on the drug price and the effect of the number of brands on the intensity of competition. Both the entry of biosimilars and new branded drugs have increased competition and reduced prices. According to our estimates, an increase in the market share of biosimilars from 10 % to 60 %, will be accompanied with a 50 % reduction in the expected price. Only two years after entry, the first biosimilars in this drug category had gained a market share of 40 % in Norwegian hospitals. Although entry barriers for biosimilars are higher than for generics of chemical substances, significant cost savings are expected from patent expirations of expensive biologics as well. The centralized design of the tenders is an important institutional factor behind the strong competition effect.
Published: Online January 2020