A change in this field was introduced in October last year, which in principle means that pharmacies are obliged to exchange a drug in a prescription for a cheaper equivalent (generic) unless the customer is willing to pay the difference. The effect of this new regulation, combined with patents expiring, has led to significant price competition. Pharmaceuticals companies have gradually lowered their prices through more than 3,500 reductions, which benefits us as individuals when we purchase prescription drugs and as tax-payers as the cost of the county councils’ subsidies for prescription drugs declines. Pharmaceuticals’ costs are included in CPI as one of many sub-indices and are intended to reflect the average household’s costs for prescription drugs. Over the past ten years this index has risen at an average rate of 12 per cent a year. Now this increase has been turned around to a small decrease. The difference between the historical rate of increase and the current price fall corresponds to a 2 saving of approximately SEK 1 billion a year for Swedish households. Correspondingly, the county councils’ costs have been reduced by approximately SEK 2 billion. There are large sums involved here and they deserve some attention. Nevertheless, it is difficult to find articles dealing with these large savings and with the increase in competition. The main aspect appears to have been lost in the media. Instead, one finds articles on the difficulties for our monopoly company Apoteket to adapt, as it exists on a margin of approximately 20 per cent.
High level of international mobility If one looks at this period in diagram form, it is quite striking how much growth varied, even if a fiveyear sliding average is used. The fluctuations in economic activity were considerable and this of course put households in a vulnerable position, as there was broadly speaking no social welfare system at that time. Although living conditions improved rapidly, they were still insufficient for many people. There was extensive emigration. However, a large number of these emigrants returned to Sweden and we had a widespread interchange with other countries. There were very few limitations to international mobility for people, capital, products and ideas. If we instead look at price developments, we can observe average low rates of price increase around 2 per cent a year during this time, and during the period as whole. However, there are also substantial variations. There were general price falls - deflation - on a number of occasions. Deflation is normally associated with very large shocks such as those during the 1930s depression in the USA and Germany, but at the end of the 19th century, there were also price falls in Sweden during an otherwise favourable economic climate. One important explanation for this is that deflation is not necessarily caused by weak demand in the economy. Rapid productivity growth can also generate a price fall and this was what occurred periodically during the second half of the 19th century.