An Impact of Localization of Pharmaceutical Drugs on Competition and Prices in Public Procurement

Simultaneously with the development of the state segment of the pharmaceutical market in Russia, since 2008, the policy of import substitution of foreign medicines has been implemented. Particular attention is paid to stimulating localization, which makes it possible to reduce dependence on imports and quickly master the production of high-tech products. This research paper is devoted to identifying the effect of localization on prices and competition in public procurement. The effect was assessed based on data from electronic auctions in accordance with Federal Law No. 44-FZ for the period 2014-2019. using two approaches - Differences-in-Differences and Event-based Study. The treatment group included three active substances that are included in the composition of drugs localized at the stage of secondary packaging in the period 2016-2017. As a result, a significant effect on the prices of government purchases was confirmed for two drugs - prices for "Aktilize" (active substance - alteplase) and "Metalize" (active substance - tenecteplase) increased on average by 11% and 4.2%, respectively. There was also a negative impact of localization on the level of competition (number of applications filed) for these two drugs.