The effect of group purchasing on prices hospitals pay for medicines.

I estimate the impact of group purchasing on medicine prices in French hospitals, taking advantage of the entry of hospitals into regional purchasing groups between 2009 and 2014. Based on a new database providing the average annual prices paid for all innovative and high-priced medicines in public hospitals, I use a two-way fixed effects model that controls for hospitals' medicine-specific bargaining power and medicine-specific price trends. I find that group purchasing slightly reduces the overall prices of medicines but has no impact on the prices of medicines that have no alternative on the market. On the contrary, prices of medicines in oligopoly markets are extensively impacted.