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Strategic Pricing Of New Pharmaceuticals

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Author Info
Z. John Lu
William S. Comanor
Abstract

This paper provides empirical evidence on the leading factors affecting the prices of new pharmaceuticals, both at introduction and after 4, 6, and 8 years. Most important is the extent of therapeutic advance embodied in a new product. For drugs which represent important therapeutic gains, launch prices can be two or three times those of existing drugs used for the same purposes, while drugs that largely duplicate the actions of currently available products are typically priced at comparable levels. In addition, the number of branded substitutes has a substantial negative effect on launch prices, which reflects the importance of competitive pressures. Duplicate products thereby play an important economic role in pharmaceutical markets. © 2000 by the President and Fellows of Harvard College and the Massachusetts Institute of Technolog

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Publisher Info
Article provided by MIT Press in its journal The Review of Economics and Statistics.

Volume (Year): 80 (1998)
Issue (Month): 1 (February)
Pages: 108-118
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Handle: RePEc:tpr:restat:v:80:y:1998:i:1:p:108-118

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  1. Donald J Wright, 2002. "The drug bargaining game: Pharmaceutical regulation in Australia, CHERE Discussion Paper No 51," Discussion Papers 51, CHERE, University of Technology, Sydney. [Downloadable!]
  2. Kurt R. Brekke & Michael Kuhn, 2005. "Direct to Consumer Advertising in Pharmaceutical Markets," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  3. Jean O. Lanjouw, 2005. "Patents, Price Controls, and Access to New Drugs: How Policy Affects Global Market Entry," NBER Working Papers 11321, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. N. Lalitha, 2006. "India’s Pharmaceutical Industry in the WTO Regime: A SWOT Analysis," Working Papers id:453, esocialsciences.com. [Downloadable!]
  5. Henry G. Grabowski & David B. Ridley & Kevin A. Schulman, 2007. "Entry and competition in generic biologics," Health Economics, John Wiley & Sons, Ltd., vol. 28(4-5), pages 439-451. [Downloadable!]
  6. John Cawley & John A. Rizzo, 2005. "The Competitive Effects of Drug Withdrawals," NBER Working Papers 11223, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. William S. Comanor & Stuart O. Schweitzer, 2007. "Determinants of drug prices and expenditures," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(4-5), pages 357-370. [Downloadable!]
  8. Antonio Cabrales & Sergi Jiménez-Martín, 2008. "The Determinants of Pricing in Pharmaceuticals: Are U.S. prices really so high?," Working Papers 2008-18, FEDEA. [Downloadable!]
  9. Alka Chadha & Åke Blomqvist, 2005. "Patent Races, “Me-Too” Drugs, and Generics: A Developing-World Perspective," Departmental Working Papers wp0513, National University of Singapore, Department of Economics. [Downloadable!]
  10. Shubham Chaudhuri & Pinelopi K. Goldberg & Panle Jia, 2003. "The Effects of Extending Intellectual Property Rights Protection to Developing Countries: A Case Study of the Indian Pharmaceutical," Discussion Papers 0304-08, Columbia University, Department of Economics. [Downloadable!]
  11. Ganslandt, Mattias & Maskus, Keith E., 2004. "Parallel Import and the Pricing of Pharmaceutical Products: Evidence from the European Union," Working Paper Series 622, Research Institute of Industrial Economics. [Downloadable!]
    Other versions:
  12. Ernst R. Berndt & Robert S. Pindyck & Pierre Azoulay, 2000. "Consumption Externalities and Diffusion in Pharmaceutical Markets: Antiulcer Drugs," NBER Working Papers 7772, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. repec:bep:eapcon:v:5:y:2006:i:1:p:1511-1511 is not listed on IDEAS
  14. Shubham Chaudhuri & Pinelopi K. Goldberg & Panle Jia, 2003. "Estimating the Effects of Global Patent Protection in Pharmaceuticals: A Case Study of Quinolones in India," NBER Working Papers 10159, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  15. Frank R. Lichtenberg & Tomas J. Philipson, 2002. "The Dual Effects of Intellectual Property Regulations: Within- and Between-Patent Competition in the US," Working Papers 0209, Harris School of Public Policy Studies, University of Chicago. [Downloadable!]
  16. Antonio Cabrales & Sergi Jiménez-Martín, 2007. "The Determinants of Pricing in Pharmaceuticals: Are U.S. Prices Really Higher than Those of Canada?," UFAE and IAE Working Papers 697.07, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
    Other versions:
  17. Joan Ramon Borrell Arque, 2004. "Las patentes aceleran o retrasan la comercializacion de nuevos medicamentos en los paises en desarrollo?," Working Papers in Economics 122, Universitat de Barcelona. Espai de Recerca en Economia. [Downloadable!]
  18. Grönqvist, Erik & Lundin, Douglas, 2006. "Incentives for Clinical Trials," Working Paper Series in Economics and Finance 636, Stockholm School of Economics. [Downloadable!]
  19. Frank R. Lichtenberg & Tomas J. Philipson, 2002. "The Dual Effects of Intellectual Property Regulations: Within- and Between- Patent Competition in the US Pharmaceuticals Industry," NBER Working Papers 9303, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  20. Kurt R. Brekke & Odd Rune Straume, 2008. "Pharmaceutical Patents: Incentives for R&D or Marketing?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  21. F. M. Scherer, 1998. "The Size Distribution of Profits from Innovation," Annales d'Economie et de Statistique, ADRES, issue 49-50, pages 20, Janvier-J. [Downloadable!]
  22. Shubham Chaudhuri, 2006. "Estimating the Effects of Global Patent Protection in Pharmaceuticals: A Case Study of Quinolones in India," Working Papers id:772, esocialsciences.com. [Downloadable!]
  23. William S. Comanor & Stuart O. Schweitzer, 2007. "Determinants of drug prices and expenditures," Health Economics, John Wiley & Sons, Ltd., vol. 28(4-5), pages 357-370. [Downloadable!]
  24. Henry G. Grabowski & David B. Ridley & Kevin A. Schulman, 2007. "Entry and competition in generic biologics," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(4-5), pages 439-451. [Downloadable!]
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