Reference Pricing Versus Co-Payment in the Pharmaceutical Industry: Firm's Pricing Strategies
AbstractWithin a horizontally differentiation model and allowing for heterogeneous qualities, we analyze the effects of reference pricing reimbursement on firms’ pricing strategies. With this analysis we find inherent incentives for firms’ pricing behaviour, and consequently we shed some light on time consistency of such policy. The analysis encompasses different reference price rules. Results show that if drugs have equal quality, reference pricing may lead to higher prices. With quality differentiation both the minimum and linear policies unambiguously lead to higher prices.
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Bibliographic InfoPaper provided by Centre for Health Economics, University of York in its series Working Papers with number 027cherp.
Length: 38 pages
Date of creation: Apr 2007
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-02-16 (All new papers)
- NEP-HEA-2008-02-16 (Health Economics)
- NEP-IND-2008-02-16 (Industrial Organization)
- NEP-MIC-2008-02-16 (Microeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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