The elasticity of drugs demand in Colombia’s pharmaceutical market

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Johanna Vásquez Velásquez
Karoll Gómez Portilla
Elkin Castaño Vélez
José Vicente Cadavid Herrera
Andrés Ramírez Hassan

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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