External referencing and pharmaceutical price negotiation
AbstractExternal referencing (ER) imposes a price cap for pharmaceuticals based on prices of identical products in foreign countries. Suppose a foreign country (F) negotiates prices with a pharmaceutical firm while a home country (H) can either negotiate independently or implement ER based on the foreign price. We show that country H always prefers ER if (i) it can condition ER on the drug being subsidized in the foreign country and (ii) copayments are higher in H than in F. H's preference isreinforced when the difference between country copayments is large and/or H's population is small. External referencing by H always harms F if (ii) holds, but less so if (i) holds.
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Date of creation: 2011
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Publication status: Published, Health Economics, 2011, 20, 6, pp. 737-756
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pharmaceuticals ; external referencing ; price negotiation;
Other versions of this item:
- Begoña Garcia Mariñoso & Izabela Jelovac & Pau Olivella, 2011. "External referencing and pharmaceutical price negotiation," Health Economics, John Wiley & Sons, Ltd., vol. 20(6), pages 737-756, June.
- Garcia Marinoso, Begona & Jelovac, Izabella & Olivella, Pau, 2011. "External referencing and pharmaceutical price negociation," Economics Papers from University Paris Dauphine 123456789/5987, Paris Dauphine University.
- L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-08-06 (All new papers)
- NEP-HEA-2008-08-06 (Health Economics)
- NEP-IND-2008-08-06 (Industrial Organization)
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