The elasticity of drugs demand in Colombia’s pharmaceutical market
Main Article Content
Keywords
Elasticity, Pharmaceutics market, AIDS model, Cointegration
Abstract
Based on a dynamic specification of the AIDS model arisen from cointegration techniques, this research estimated the elasticity of the intra-molecular, brand and generic demand for three tracer conditions: essential hypertension, diabetes and hyperlipidemia both in the non-profit and private Colombian market. The estimate of the intra-molecular demand elasticity allows us to conclude that both brand-name and generic drugs are inelastic to price changes, they are luxury goods according to expenditure elasticity and intra-molecular replacement seems to exist due to the elasticity of substitution.
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References
Akbulutgiller, K. (2008). Application of Almost Ideal Demand System for a Pharmaceu¬tical. Recuperado de: http://dalea.du.se/theses/archive/4fb131bd-8534-4a13- 9ba0-e966521263dd/df15f24f-9815-493d-8bb8-b4166b3fa391.pdf
Alexander, D. L.; Flynn, J. E. & Linkins, L. A. (1994, agosto). Estimates of the demand for ethical pharmaceutical drugs across countries and time. Applied Economics, 26(8), 821-826.
Anderson, G. J. & Blundell, R. W. (1982). Estimation and hypothesis testing in dynamic singular equation systems. Econométrica, 50, 1559-1571.
Anderson, G. J. & Blundell, R. W. (1983). Testing restrictions in a flexible demand system: An application to consum¬ers´ expenditure in Canada”. Review of Economic Studies, 50, 397-410.
Archila, E. J. et al. (2005, junio). Estudio sobre la propiedad intelectual en el sector far¬macéutico colombiano. Informe de Investigación. Fedesarrollo y Fundación Santa Fe de Bogotá. Recuperado de: ftp://ftp.fedesarrollo.org.co/pub/documentos/2005/ dc01-2005.PDF
Attfield, C. L. (1997, enero). Estimating a Cointegrating Demand System. European Eco¬nomic Review, 41(1), 61-73.
Caves, R. E. & Williamson, P. J. (1985, diciembre). ¿What is Products Differentiation, Re¬ally? The Journal of Industrial Economics, 34(2), 113-132.
Caves, R. E. & Whinston, M. D. (1991). Patent Expiration, Entry and Competition in the U.S. Pharmaceutical Industry. Brooking Papers on Economics Activity. Microeconomics, 1-66.
Chaudhuri, S.; Golberg, P. K. & Jia, P. (2003, diciembre). Estimating the Effects of Global Patent Protection in Pharmaceuticals: A Case Study of Quinolones in India. National Bureau of Economic Research, Working paper, 10159.
Crawford, G. & Shum, M. (2005, julio). Uncertainty and Learning in Pharmaceutical De¬mand. Econometrica, 73(4), 1137-1173.
Deaton, A. S. & Muellbauer, J. (1980, junio). An Almost Ideal Demand System. American Economic Review, 70(3), 312-326.
Ellison, S. F. et al. (1997, agosto). Characteristics of Demand for Pharmaceutical Pro¬ducts: An Examination of Four Cephalosporin’s. The RAND Journal of Economics, 28(3), 426-446.
Engle, R. F. & Granger, C. (1987, marzo). Cointegration and Error-Correction: Representa¬tion, Estimation, and Testing. Econometrica, 55, pp. 251-276.
Grabowski, H. G. & Vernon, J. M. (1987, agosto). Pioneers, imitators and generics-a simu¬lation model of Schumpeterian competition. The Quarterly Journal of Economics, 102(3), 491-526.
Green, R. & Alston, J. M. (1990, mayo). Elasticities in AIDS Models. American Journal of Agriculture Economic, 72(2), 442-445.
Hellerstein, J. K. (1994, verano). The Importance the Physicians in the Generic versus Trade-name Prescription Decision. The RAND Journal of Economics, 29(1), 108-136.
Jaramillo, H.; Restrepo, J. M. & Latorre, C. (2003, agosto). Mercado de medicamentos, regulación y políticas públicas. Borradores de Investigación. Serie Documentos en Economía, 004328. Recuperado de: http://economia.urosario.edu.co/ investiga¬cion/bi/bi38.pdf
Koukouritakis, M. (2003). Eu Accession Effects on Imports of Manufactures: the Case of Greece. Department of Economics, University of Cyprus. Discussion paper, 02. Recuperado de: http://www.econ.ucy.ac.cy/papers/2-2003.pdf
Mejía, R. S. et al. (2002, julio-agosto). La política farmacéutica nacional en Colombia y la reforma de la seguridad social: acceso y uso racional de medicamentos. Cad. Saúde Pública, 18(4), 1025-1039.
Merino, A. (2003). Demand for Pharmaceutical Drugs: a Choice Modelling Experiment. (Tesis Ph.D). Departamento de Economía y Empresa, Universidad Pompeu Fabra. Recuperado de: http://www.econ.upf.edu/docs/papers/downloads/704.pdf
Mortimer, O. R. (1998, noviembre). Demand for Prescription Drugs: The Effects of Mana¬ged Care Pharmacy Benefits. Abstr Book Assoc Health Serv Res Meet, 15, 113-114.
Pashardes, P. (1993, julio). Bias in estimating the almost ideal demand system with the Stone index approximation. The Economic Journal, 103(419), 908-915.
Santerre, R. E., Stephen, P. (2000). The pharmaceutical industry. Health Economics: Theo¬ries, Insights, and Industry Studies. The Dryden Press, 508-553.
Stern, S. (1996, diciembre). Market Definition and the Returns to Innovation: Substitu¬tion Patterns in Pharmaceutical Markets. MIT Sloan School & NBER, working paper, 36-46. Recuperado de: http://www.kellogg.northwestern.edu/faculty/sstern/htm/ NEW researchpage/Publications/Stern%20RX%20Demand.pdf
Zuleta, L. A. & Junca, J. C. (2001, abril). Efectos económicos y sociales de la regulación sobre la industria farmacéutica colombiana: el caso de los estudios de bioequiva¬lencia y biodisponibilidad, de los secretos empresariales y las buenas prácticas de manufactura. Fedesarrollo-Misión Social. Recuperado de: http://www.misionsalud. org/mision/estudio2.pdf
Zuleta, L. A.; Parra, M. L. (1999, julio). Incidencia del régimen de patentes de la industria farmacéutica sobre la economía colombiana. Informe Final. Fedesarrollo. Recupe¬rado de: http://www.misionsalud.org/mision/estudio1.pdf
Alexander, D. L.; Flynn, J. E. & Linkins, L. A. (1994, agosto). Estimates of the demand for ethical pharmaceutical drugs across countries and time. Applied Economics, 26(8), 821-826.
Anderson, G. J. & Blundell, R. W. (1982). Estimation and hypothesis testing in dynamic singular equation systems. Econométrica, 50, 1559-1571.
Anderson, G. J. & Blundell, R. W. (1983). Testing restrictions in a flexible demand system: An application to consum¬ers´ expenditure in Canada”. Review of Economic Studies, 50, 397-410.
Archila, E. J. et al. (2005, junio). Estudio sobre la propiedad intelectual en el sector far¬macéutico colombiano. Informe de Investigación. Fedesarrollo y Fundación Santa Fe de Bogotá. Recuperado de: ftp://ftp.fedesarrollo.org.co/pub/documentos/2005/ dc01-2005.PDF
Attfield, C. L. (1997, enero). Estimating a Cointegrating Demand System. European Eco¬nomic Review, 41(1), 61-73.
Caves, R. E. & Williamson, P. J. (1985, diciembre). ¿What is Products Differentiation, Re¬ally? The Journal of Industrial Economics, 34(2), 113-132.
Caves, R. E. & Whinston, M. D. (1991). Patent Expiration, Entry and Competition in the U.S. Pharmaceutical Industry. Brooking Papers on Economics Activity. Microeconomics, 1-66.
Chaudhuri, S.; Golberg, P. K. & Jia, P. (2003, diciembre). Estimating the Effects of Global Patent Protection in Pharmaceuticals: A Case Study of Quinolones in India. National Bureau of Economic Research, Working paper, 10159.
Crawford, G. & Shum, M. (2005, julio). Uncertainty and Learning in Pharmaceutical De¬mand. Econometrica, 73(4), 1137-1173.
Deaton, A. S. & Muellbauer, J. (1980, junio). An Almost Ideal Demand System. American Economic Review, 70(3), 312-326.
Ellison, S. F. et al. (1997, agosto). Characteristics of Demand for Pharmaceutical Pro¬ducts: An Examination of Four Cephalosporin’s. The RAND Journal of Economics, 28(3), 426-446.
Engle, R. F. & Granger, C. (1987, marzo). Cointegration and Error-Correction: Representa¬tion, Estimation, and Testing. Econometrica, 55, pp. 251-276.
Grabowski, H. G. & Vernon, J. M. (1987, agosto). Pioneers, imitators and generics-a simu¬lation model of Schumpeterian competition. The Quarterly Journal of Economics, 102(3), 491-526.
Green, R. & Alston, J. M. (1990, mayo). Elasticities in AIDS Models. American Journal of Agriculture Economic, 72(2), 442-445.
Hellerstein, J. K. (1994, verano). The Importance the Physicians in the Generic versus Trade-name Prescription Decision. The RAND Journal of Economics, 29(1), 108-136.
Jaramillo, H.; Restrepo, J. M. & Latorre, C. (2003, agosto). Mercado de medicamentos, regulación y políticas públicas. Borradores de Investigación. Serie Documentos en Economía, 004328. Recuperado de: http://economia.urosario.edu.co/ investiga¬cion/bi/bi38.pdf
Koukouritakis, M. (2003). Eu Accession Effects on Imports of Manufactures: the Case of Greece. Department of Economics, University of Cyprus. Discussion paper, 02. Recuperado de: http://www.econ.ucy.ac.cy/papers/2-2003.pdf
Mejía, R. S. et al. (2002, julio-agosto). La política farmacéutica nacional en Colombia y la reforma de la seguridad social: acceso y uso racional de medicamentos. Cad. Saúde Pública, 18(4), 1025-1039.
Merino, A. (2003). Demand for Pharmaceutical Drugs: a Choice Modelling Experiment. (Tesis Ph.D). Departamento de Economía y Empresa, Universidad Pompeu Fabra. Recuperado de: http://www.econ.upf.edu/docs/papers/downloads/704.pdf
Mortimer, O. R. (1998, noviembre). Demand for Prescription Drugs: The Effects of Mana¬ged Care Pharmacy Benefits. Abstr Book Assoc Health Serv Res Meet, 15, 113-114.
Pashardes, P. (1993, julio). Bias in estimating the almost ideal demand system with the Stone index approximation. The Economic Journal, 103(419), 908-915.
Santerre, R. E., Stephen, P. (2000). The pharmaceutical industry. Health Economics: Theo¬ries, Insights, and Industry Studies. The Dryden Press, 508-553.
Stern, S. (1996, diciembre). Market Definition and the Returns to Innovation: Substitu¬tion Patterns in Pharmaceutical Markets. MIT Sloan School & NBER, working paper, 36-46. Recuperado de: http://www.kellogg.northwestern.edu/faculty/sstern/htm/ NEW researchpage/Publications/Stern%20RX%20Demand.pdf
Zuleta, L. A. & Junca, J. C. (2001, abril). Efectos económicos y sociales de la regulación sobre la industria farmacéutica colombiana: el caso de los estudios de bioequiva¬lencia y biodisponibilidad, de los secretos empresariales y las buenas prácticas de manufactura. Fedesarrollo-Misión Social. Recuperado de: http://www.misionsalud. org/mision/estudio2.pdf
Zuleta, L. A.; Parra, M. L. (1999, julio). Incidencia del régimen de patentes de la industria farmacéutica sobre la economía colombiana. Informe Final. Fedesarrollo. Recupe¬rado de: http://www.misionsalud.org/mision/estudio1.pdf
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Published
Jun 30, 2013
Article Details
How to Cite
Vásquez Velásquez, J., Gómez Portilla, K., Castaño Vélez, E., Cadavid Herrera, J. V., & Ramírez Hassan, A. (2013). The elasticity of drugs demand in Colombia’s pharmaceutical market. Ecos De Economía, 17(36), 147–172. https://doi.org/10.17230/ecos.2013.36.7
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