Competitive bidding in drug procurement: evidence from China
- Collection:
- Health Policy and Services Research
- Series Title(s):
- Working paper (Stanford Institute for Economic Policy Research)
- Author(s):
- Cao, Shengmao, author Yi, Lisa Xuejie, author Yu, Chuan, author
- Contributor(s):
- Stanford Institute for Economic Policy Research, issuing body.
- Publication:
- [Stanford, CA] : Stanford Institute for Economic Policy Research (SIEPR), January 2022
- Language(s):
- English
- Format:
- Text
- Subject(s):
- Competitive Bidding Drug Costs Economics, Pharmaceutical Models, Economic China United States
- Genre(s):
- Technical Report
- Abstract:
- We study the impact of competitive bidding in the procurement of off-patent drugs. In 2019, China introduced competitive bidding with a quantity guarantee for thirty-one molecules in nine provinces. Using a difference-in-difference design, we show that the program reduced average drug prices by 47.4%. Generic drug firms won the majority of the bids and on aver- age cut prices by 59.4%. We develop a model of demand and supply to quantify the trade-off between lower prices and choice distortions. Competitive bidding increases consumer welfare if policymakers consider brand preferences welfare irrelevant. The program also reduced government expenditures on insurance by 24.3%.
- Copyright:
- Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY-NC-ND license. (More information)
- Extent:
- 1 online resource (1 PDF file (40, A-18 pages))
- Illustrations:
- Illustrations
- NLM Unique ID:
- 9918383988606676 (See catalog record)
- Permanent Link:
- http://resource.nlm.nih.gov/9918383988606676