The importance of the first generic substitution: Evidence from Sweden

• Main Authors: JANSSEN, Aljoscha, GRANLUND, David
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2023
• Subjects: Generic substitution; Pharmaceuticals; Health care costs; Behavioral Economics; Pharmacy and Pharmaceutical Sciences
• Online Access: https://ink.library.smu.edu.sg/soe_research/2697; https://ink.library.smu.edu.sg/context/soe_research/article/3696/viewcontent/SSRN_id4072191.pdf
• Institution: Singapore Management University

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 em-ploy a dynamic event study and an instrumental variable approach to show that an initial substitution reduces the probability of opposing subsequent substitutions by 39 percent-age points. 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.