Many countries have adopted different price regulations to contain pharmaceutical prices, even in markets exposed to generic competition. This column documents subtle pricing patterns in the Swedish pharmaceutical market, where consumers get full reimbursement only by buying the cheapest product (the “product of the month”) and can only purchase their prescribed medicine in the packet size specified in their prescription. While the product-of-the-month regime substantially decreased prices and expenditure per pill initially, prices per pill are 4-5 times higher in package sizes sold by monopoly producers. These firms appear to have learned to exploit quirks of the regulation to increase their market power.



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