The elasticity of drugs demand in Colombia’s pharmaceutical market

Abstract

Based on a dynamic specification of the AIDS model arisen from cointegration techniques, this research estimated the elasticity of the intra-molecular, brand and generic demand for three tracer conditions: essential hypertension, diabetes and hyperlipidemia both in the non-profit and private Colombian market. The estimate of the intra-molecular demand elasticity allows us to conclude that both brand-name and generic drugs are inelastic to price changes, they are luxury goods according to expenditure elasticity and intra-molecular replacement seems to exist due to the elasticity of substitution