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Price Differentiation and Transparency in the Global Pharmaceutical Marketplace

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Author Info

  • David B. Ridley

    (The Fuqua School of Business, Duke University, Durham, North Carolina, USA)

Abstract

Pharmaceutical manufacturers have increased the availability of their products and sometimes increased their own financial returns by charging lower prices outside of the US and by discounting to lower-income patients in the US. Examples include discounted HIV-AIDS drugs in developing countries and pharmaceutical manufacturers' discount cards in the US. Representatives of some international organisations argue that the price reductions are insufficient to make the medications widely available to lower-income patients. The WHO advocates both differential pricing and price transparency. While its efforts are well meaning, this paper identifies six concerns about its methods of comparing the price of a given molecule across manufacturers and across countries. More significantly, the WHO efforts to increase transparency are likely to lead to less price differentiation and less access to innovative pharmaceuticals. An important reason why manufacturers are reluctant to charge lower prices in lower-income countries is that they fear that such low prices will undermine the prices they charge to higher-income consumers. International organisations should not facilitate transparency but should dissuade governments from making price comparisons and basing their prices on those of lower-income countries. Furthermore, they should endeavour to keep low-priced and free drugs in the hands of the low-income consumers for which they were intended.

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Bibliographic Info

Article provided by Springer Healthcare | Adis in its journal PharmacoEconomics.

Volume (Year): 23 (2005)
Issue (Month): 7 ()
Pages: 651-658

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Handle: RePEc:wkh:phecon:v:23:y:2005:i:7:p:651-658

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Web page: http://pharmacoeconomics.adisonline.com/

Related research

Keywords: Health-policy; Pharmaceutical-industry; Reimbursement;

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Cited by:
  1. Tamara Hafner & David Popp, 2011. "China and India as Suppliers of Affordable Medicines to Developing Countries," NBER Working Papers 17249, National Bureau of Economic Research, Inc.
  2. Christopher J. Longo, 2011. "Encouraging pharmaceutical innovation to meet the needs of both developed and developing countries," International Journal of Development Issues, Emerald Group Publishing, vol. 10(1), pages 92-101, April.
  3. Gandjour, Afschin & Chernyak, Nadja, 2011. "A new prize system for drug innovation," Health Policy, Elsevier, vol. 102(2), pages 170-177.

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