From generic scheme to brand-generic scheme: Have new policy influenced the efficiency of Iranian pharmaceutical companies?

Abstract

Objective: Brand-generic scheme was implemented in Iran to improve the competition in the pharmaceutical market. In this study, we aim to assess if this policy had any positive effect on efficiency of Iranian pharmaceutical companies. Methods: We used data envelopment analysis to evaluate the relative efficiency of pharmaceutical companies during 1999-2008. The Wilcoxon matched-pairs signed-rank and sign tests were used to assess the difference between mean technical efficiency of companies before and after implementation of the new policy. Findings: Although the Wilcoxon matched-pairs signed-rank tests did not show any significant differences in favor of the new policy in terms of both relative and pure (managerial) technical efficiency for included companies (P = 0.079 and 0.07, respectively), but the one-sided sign test indicated that only relative pure (managerial) efficiency has been improved after this policy (P = 0.031). Conclusion: The "brand-generic scheme" does not seem to be a successful policy to improve efficiency level and prompt competition in pharmaceutical companies in Iran. To achieve this aim, consideration of infrastructural requirements including transparent and non-discriminating laws and regulations to support competition, the competitive pricing policies, the presence of international companies in the market, and full privatization of companies had to be also deeming by policy makers.

Keywords

• Data envelopment analysis; efficiency; Iran; pharmaceutical