Department of Economics and Business Economics

Marianne Simonsen

Price Sensitivity of Demand for Prescription Drugs: Exploiting a Regression Kink Design

Research output: Working paperResearch


  • Wp10 03

    Final published version, 471 KB, PDF-document

  • Afdeling for Nationaløkonomi
  • School of Economics and Management
This paper investigates price sensitivity of demand for prescription drugs using drug purchase
records for at 20% random sample of the Danish population. We identify price responsiveness by
exploiting exogenous variation in prices caused by kinked reimbursement schemes and implement a
regression kink design. Thus, within a unifying framework we uncover price sensitivity for different
subpopulations and types of drugs. The results suggest low average price responsiveness with
corresponding price elasticities ranging from -0.08 to -0.25, implying that demand is inelastic.
Individuals with lower education and income are, however, more responsive to the price. Also,
essential drugs that prevent deterioration in health and prolong life have lower associated average
price sensitivity.
Original languageEnglish
Place of publicationAarhus
PublisherInstitut for Økonomi, Aarhus Universitet
Number of pages45
Publication statusPublished - 2010

    Research areas

  • Prescription drugs, price, reimbursement schemes, regression kink design

See relations at Aarhus University Citationformats

Download statistics

No data available

ID: 18807817