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Competition in drug markets, entry of new products and doctor's prescritions


Andrea Coscelli-TMR Research Proposal (Abstract)
Research Objectives and Content Within the EEC, different countries have chosen different health care policies. These policies largely differ in the extent to which doctors, hospitals, and pharmaceutical companies are regulated. The economic literature has recently started addressing some of the issues determining competition in drug markets, building on the results made available by the medical literature and other social sciences. My research project is composed of different studies, each addressing a particular aspect of competition within therapeutic drug markets. I plan to study the demand for pharmaceutical products by doctors and patients by analyzing competition within molecule sub-markets and across molecules. I use data obtained from the Istituto Superiore di Sanita', which allow me both to (i) control for individual heterogeneity and (ii) investigate the economic decisions at the level at which they are formulated. By using the same detailed dataset, I plan to focus on the entry of new chemical entities (NCE) in therapeutic drug markets. The main question from a policy standpoint, is to analyze how new products gain a foothold among formularies. I answer this question by modeling how doctors choose drug therapies. The model is economic, and incorporates incentives for learning and experimentation. Ultimately, the study will provide estimates of a structural model of learning and experimentation within an agency relationship. Moreover, I want to analyze how institutional differences influence competition. I plan to analyze demand in the German market. I want to investigate issues of substitutability in prescriptions of generic and trade-name drugs in Germany over the last five to ten years. I want to estimate whether price regulation, without any change in incentives for doctors, would be strong enough in terms of cost-containment, or whether this measure should be associated with economic incentives for doctors.
Training Content The main goal of the training would consist in working together with other economists whose main research focus is in the area of applied Microeconomics, Industrial Organization in particular, and the related areas of taxation, regulation and antitrust. Working on this project within the EEC would make it easier for me (i) to collect additional data and (ii) to work together with others studying health policy in the different EU member nations.
Links with Industry My analyses are mostly of direct interest to policy makers. The results of these studies will be of immediate utility for the National Health Services, because they focus on the very basics of the demand for drugs by doctors and patients. Moreover, most of these estimates are new and this level of detail was not previously available owing to the lack of such microlevel datasets.

Funding Scheme

RGI - Research grants (individual fellowships)


Gower Street
United Kingdom

Participants (1)

Not available