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Abstract
This research presents the impact assessment for medication price regulation policy in Colombia, having as a frame of reference the relevant markets and the Unique Code of Medicines (CUM) [Código Único de Medicamentos], regulated in the circulars 04, 05, 06, 07 of 2013, and 01 of 2014. After an interdisciplinary construction of a database with information between 2010 and 2017, a statistical model of dynamic difference-in-differences was estimated. Although the effect is momentary, the reduction of spending, as an objective of the policy, it is notorious. This behavior mainly occurs since most of the medicines included in regulation reflect monopoly prices, where the most significant reduction in prices was observed and, therefore, the most considerable expense restraint.
The authors would like to express their acknowledgments to Carlos Pinzón, Edisson Rodríguez, Stanislao Maldonado, Paul Rodríguez, Jorge Flórez, Paul Díaz, Virginia Jordan, Andrés Vecino, Diana Segura, Sergio Prada, Jaime Calderón, and Mateo Ceballos; for their valuable advice, comments, and suggestions to different sections of this study.
Notes
1 Institution created by Ley 100 of 1993 and formed by the Ministry of Commerce, Industry and Tourism [Ministerio de Comercio, Industria y Turismo], the Ministry of Health and Social Protection (MinSalud) [Ministerio de Salud y Protección Social] and a delegate of the Presidency of the Republic of Colombia [Presidencia de la República de Colombia].
2 This regulatory measure, established in Colombia, addresses the reality of the pharmaceutical market and is in line with the provisions of document by National Council on Economic and Social Policy (CONPES) [Consejo Nacional de Política Económica y Social] N° 155 of 2012 about national pharmaceutical policy, which, in turn, accounts for the need and appropriateness of the application of such measures.
3 This information is taken from confidential reports informed by the Directorate of Medicines and Health Technologies of the MinSalud periodically to the National Planning Department (DNP) [Departamento Nacional de Planeación]. That calculation is made by keeping the quantities of drug sales constant, and using the prices of the drugs if they were not regulated and with regulation.
4 By which the methodology for the application of the regime of direct price control for medicines marketed in the national territory is established.
5 It should be noted that Article 3 of Circular 03 of 2013 defines the relevant market as a set of drugs that compete with each other and between which there is therapeutic and economic substitutability. Its identification has the purpose of individualizing each one of the medicines that are part of it, identified with their respective CUM.
6 CUM is the alphanumeric identifier assigned to drugs by Invima, which takes into account the Anatomic Therapeutic Chemical—ATC—classification system up to the fifth level; pharmaceutical dosage form; unit of concentration of the active ingredient; route of administration of the drug and unit of measurement of the drugs.
7 The method relies on the assumption of parallel trends; where it is assumed that, in the absence of exposure to an intervention, the subjects (the CUMs, in this case) should maintain the behavior observed prior to exposure. In the case of prices observed by Circulars, it can be inferred that the trends for regulated prices would be maintained at those observed in the twenty months prior to the entry into force of the respective Circular, if they had not been regulated.
8 The coefficient is the parameter of interest in the estimate, since it captures the differences in differences, in this case, of the logarithms of the prices: 
In this case, t = a refers to the months before the regulation was implemented and t = d to the months since the regulation entered into force (i.e., before and after September 2013). E refers to the expected value for CUM’s prices, conditioned to the value of the treatment variable.
9 This article presents the econometric results when the dependent variable is the logarithm of drug prices per MUC, however, the results are very similar when prices in thousands of COP are taken as an endogenous variable.
10 The fixed effects of time and relevant market are not presented due to space restrictions (see Appendix B).
11 For some biological products such as insulins, coagulation factors and botulinum toxin type A.
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Notes on contributors
Oscar Espinosa
Oscar Espinosa is Head of Analytical, Economic and Actuarial Studies in Health at Instituto de Evaluación Tecnológica en Salud and Director of the Economic Models and Quantitative Methods Research Group at Centro de Investigaciones para el Desarrollo at Universidad Nacional de Colombia.
Hernán Enríquez
Hernán Enríquez is Analytics Professional at Instituto de Evaluación Tecnológica en Salud and is Professor-Researcher at School of Economics at Universidad Sergio Arboleda.
Diego Ávila
Diego Ávila is Analytics Professional at Instituto de Evaluación Tecnológica en Salud and member of the Economic Models and Quantitative Methods Research Group at Centro de Investigaciones para el Desarrollo at Universidad Nacional de Colombia.
Sergio Basto
Sergio Basto is Specialist in Medicines and Health Technologies at Instituto de Evaluación Tecnológica en Salud.
Daniela Rivera
Daniela Rivera is from the Institute for Technological Assessment in Health.
Daniela López
Daniela López is Researcher at Universidad de Antioquia.
Paola Avellaneda
Paola Avellaneda is Health Economist at Directorate of Medicines and Health Technologies at Ministerio de Salud y Protección Social.
Paola Riveros
Paola Riveros is Advisor at Directorate of Economic Regulation of Social Security at Ministerio de Hacienda y Crédito Público.