In 1993 the Colombian National Health System was restructured by the creation of the General System of Social Security in Health (GSSSH). One objective of GSSSH is to attain universal health insurance through two insurance schemes. Health insurance companies are to provide a unique plan of protection, the so-called Mandatory Health Plan (MHP). The MHP includes a list of 355 active chemical generic and essential drugs in 610 pharmaceutical forms and concentrations, designed for 23 therapeutic groups. In addition, the Colombian market for drugs is divided into two sub-markets: an institutional market for those affiliated to the GSSSH and a private market for those who are not. These peculiarities make possible, in the institutional market, substitutions among drugs, by exchanging molecules within the same therapeutic groups, while in the private market it is possible by interchanging brand-name and generic-name drugs. On the other hand, price regulation within the market takes three forms: direct controls, regulated freedom and supervised freedom. Under the direct controls scheme sales monopolies are regulated and the existence of more than three laboratories that market the product is determined. Objectives: To construct an index of concentration for the ambulatory drug market in Colombia Methodology: We constructed a Herfindahl-Hirschman Index for the period 1995-2003 for the sales volumes of laboratories that market drugs included in the MHP and belonging to 10 therapeutic groups, which include 66 active chemical and 190 concentrations. The information was obtained from the reports of the IMS Health and the Ministry of Foreign Trade. The analysis covered only the private market. In addition, we examined and classified the laws and regulations governing the sector in order to identify which of the characteristics (organizational, commercial, quality, sanitary and information) should be the most important to policymakers. Results: More than 50% of the drug concentrations studied is sold by laboratories that have preserved their market power in selling from 1995 to 2003. In 50% of these there are more than three laboratories that market the product. Finally, we fitted the types of regulations and control mechanisms used by authorities with the above classification by characteristics. We found that 84.62% of the agreements refer to organizational aspects; 70% of the circular letters, to commercial aspects; 72.73 % of the decrees, to quality and organization; 71.43 % of the laws to criteria of organization, and 79.31% of the resolutions to quality and commercial aspects. Conclusions: The use of normative criteria to classify the ambulatory drug market as competitive or not cannot be based on a minimum number of sellers since the market power of a firm does not depend on this factor only. This may mean that regulators are not being efficient in their tasks and that consumers are possibly facing welfare losses.