This master thesis is a part of the project initialised by the Ministry of Health and Care Services in order to evaluate the effects of the transfer of financial responsibility to the Regional Health Authorities. The scope and the main topic for the project were sat by Stortingsproposisjon nr.1 (2008-2009) (St. prp. nr.1 2008-2009, kap.732, postene 72-75). This paper concentrates on evaluation of the reform s effects on price and competition in the market for TNF-α inhibitors and other biological anti-inflammatory medicines (six biopharmaceuticals all together).
TNF-α inhibitors and other biological anti-inflammatory medicines, belonging to the group of antineoplastic and immunomodulating medicines, have had a quite expansive sales growth during the past decade. In the specific period of time from 2003 until 2008 the total sales increased from 300 mills NOK to almost 1, 24 billion NOK. This expansion triggered for the strict cost containment governmental efforts and the financing reform of 2006. Before 01.06.2006 the use of these medicines was financed asymmetrically, both by the National Insurance Scheme (Folketrygden) and the Regional Health Authorities (RHF). After the funding reform (from 01.06.2006) all the treatment with TNF-α inhibitors and other biological anti-inflammatory biopharmaceuticals is financed through the hospitals budgets.
One can assume that transfer of the financing responsibility for these medicines is followed by increased price competition and lower prices. Also as a result of tendering competitions accomplished by Norwegian Drug Procurement Co-operation. The main hypotheses to test were: Due to the financing reform of 2006 and introduction of tendering competition as a result of that, the pharmacy retail prices on TNF-α inhibitors have been decreased over the years. Due to increased number of competitors (therapeutically equal bio- and pharmaceuticals), the pharmacy retail prices have been decreased over the years.
The panel data of 637 observations on 15 biopharmaceuticals in the time period of 01.2003 -04.2008 was included to verify the hypotheses. Because of difference in time points of market entrance not all of the biopharmaceuticals are from start to end, which makes the panel data unbalanced. These are data from both primary and secondary sources.
The first hypothesis, that pharmacy retail prices on TNF-α inhibitors have been decreased over the years due to the financing reform of 2006 and introduction of tendering competition is confirmed. Analyses of price effects were done in two ways and were similar to the methods mentioned in the temporary report (Bjarkum et al 2008). The first one was to analyse the retail pharmacy prices from the Norwegian Pharmacy Association in comparison to the maximum pharmacy prices from the Norwegian Medicines Agency. The second method was to analyse the prices by using fixed effects linear regression.
Analysis of the effects of the financing reform on competition was done by using static OLS linear regression, log-log model and by calculating Herfindahl-Hirschman index.
The main results approve the hypotheses. The achieved effects of the reform of 2006 seem to be in the range of approximately 40 60 millions NOK per year (after 01.2007).