Entry of new pharmacies in the deregulated Norwegian pharmaceuticals market—Consequences for costs and availability

ObjectivesThe objective of this study is to analyze the impact of the new regulation concerning entry of pharmacies into the Norwegian pharmaceuticals market in 2001 on cost and availability of pharmaceutical products.MethodsIn order to study costs, a translog cost function is estimated using data from the annual reports of a sample of Norwegian pharmacies before and after the deregulation of the market. Linear regression models for the number of pharmacies in each region in Norway are also estimated.ResultsThe results show that the costs of the individual pharmacies have not decreased as a consequence of the deregulation of the Norwegian pharmaceuticals market. The deregulation of the market did, however, increase the availability to pharmacy services substantially.ConclusionsIncreased availability of pharmacy services can be achieved by deregulating pharmaceutical markets as in Norway, but at the expense of increased costs for the pharmacies.