Consumption Patterns, Market Characteristics and Regulation in the Pharmaceutical Sector . Evidence for Two Therapeutic Groups in Insured Population

This paper suggests, from a theoretical framework of estimating demand functions under uncertainty, to highlight the importance of including economic variables of market operation and actors strategic organization in the design of regulations on the pharmaceutical sector. They can contribute beyond the value of pharmacological and clinical tools in the specification of standards within a framework of evidence-based medicine and dynamic analysis of cost-effectiveness in sectoral decision-making from an institution of superintendency of social insurance. With a database of 9147 and 27,647 observations on prescriptions about population covered by social security in Argentina, we analyze groups of lipid-lowering and antihypertensive therapy, respectively, by classical least squares estimation and logistic models for each product. The data provide consistent messages about the presence of differentiation mechanisms that overshadow the traditional negative relationship between price and sales. In particular, the interaction between brand and drugs, which can be extended to technological changes in a dynamic context, implies a complementary perspective in designing the regulatory framework. It must consider the power of negotiation and establishment of rules of producers in each particular case, to coordinate incentives to encourage rational behavior in prescribing, moving in a pattern of consumption more cost-effective.