A Study On The Price And Demand Of Urban Employees Basic Medical Insurance Drugs

Currently,China's drug price formation mechanism and price elasticity are still unclear.The roles of governmental regulation and market forces,the own-and cross-price elasticity are needed further research.In order to find the answers to these questions,our study investigates the determinants of the prices of pharmaceuticals and their impact on the demand for prescription drugs by using the data from Tianjin Urban Employee Basic Medical Insurance(UEBMI)database from 2008 to 2010.In the price research section,based on the Chinese drug pricing system and policy,this paper summarized the price formation process and constructed the equilibrium price model and the Hedonic price model.Multiple regression method was employed for pricing empirical study by using data from Tianjin UEBMI database.The results show that government regulation policies for generic drugs have reached the expectation goals and the regulated competition has a positive role in shaping the pharmaceutical market.In the section of demand study,with in a physician dual principal-agent framework,controlling the behavioral inertia and preference,traditional demand function and BLP model were constructed to estimate the price elasticity.Traditional demand models were constructed to estimated price elasticity by using three treatment categories including anti-tumor,circulatory system and antimicrobial drugs from Tianjin UEBMI database.The dynamic panel model results show that price elasticity was from low to high,followed by antineoplastic agents,anti-microbial agents and cardiovascular drugs.In the same treatment area,the price elasticity of generic drugs is greater than the original drug price elasticity.Based on the BLP model of antihypertensive drugs,the second-order least squares estimation results through the Tianjin UEBMI database show that the logarithmic price BLP model had an advantage.The elasticity of antihypertensive pharmaceutical demand exceeded the unit elasticity,and the results were consistent with the dynamic panel model in the Chapter 4.In addition,the pharmaceutical cross-price elasticity was almost to zero.Several policy revelations were as follow: first,policy decision makers should accelerate the quality consistency assessment including bioequivalence study and clinical effectiveness evaluation.Second,reduce frictions among policies are necessary.Third,the promotion of price and demand competition between generic and originator in order to reap full competition benefit are necessary.Fourth,price regulation need to consider the field of treatment and quality factors,and then control the cost of drugs.Finally,transfer mechanism to intervene in the prescription behavior preferences and habits,and then control the cost of drugs.There is some innovation in our study.Firstly,this study intensively address the role of the government regulation factors to further improve the research direction of the empirical price mechanism.Secondly,there is some technical innovations in that we carry out empirical study on the relationship between the price and the demand,such as the dynamic panel model and controlling the doctor's prescription preferences in our study.The price elasticity of drug demand is analyzed from two different angles of treatment and different treatment fields which is useful for us to learn more about the price elasticity of pharmaceutical in China.Finally,the application of BLP method and comparing the two different price forms on BLP model were the first time to explore in estimating the price elasticity for the Chinese drug demand.