The Importance of the First Generic Substitution: Evidence from Sweden
39 Pages Posted: 4 May 2022
Date Written: April 1, 2022
We analyze changes in the willingness to substitute from prescribed pharmaceuticals to more affordable generic equivalents in response to the first experience with a substitution. Using Swedish individual-level data of prescribed and dispensed pharmaceuticals, we employ a dynamic event study and an instrumental variable approach to show that an initial substitution reduces the probability of opposing subsequent substitutions by 39 percentage points. The impact of a first substitution is especially large among elderly patients. We recommend that policy-makers target patients with a history of opposed substitution and offer additional discounts to promote substitution as long-term savings outweigh one-time costs.
Keywords: Generic Substitution, Pharmaceuticals, Health Care Costs
JEL Classification: D12, I11, I12
Suggested Citation: Suggested Citation