The drug bargaining game: Pharmaceutical regulation in Australia, CHERE Discussion Paper No 51
AbstractMany countries, including Australia, regulate the price consumers pay for pharmaceuticals. In this paper, the Australian Pharmaceutical Benefits Scheme (PBS) is modelled as a multi-stage game played between the regulator and pharmaceutical firms. Conditions are derived under which vertically differentiated firms are regulated and a number of issues are discussed. These include efficiency, regulated firm profitability, leakage, and price discrimination. An extension examines the introduction of new drugs and concludes that if all the benefits of a new drug are to be realised, then existing agreements and transfers (per-unit subsidies) need to be renegotiated.
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Bibliographic InfoPaper provided by CHERE, University of Technology, Sydney in its series Discussion Papers with number 51.
Date of creation: Dec 2002
Date of revision:
Find related papers by JEL classification:
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-04-21 (All new papers)
- NEP-HEA-2007-04-21 (Health Economics)
- NEP-REG-2007-04-21 (Regulation)
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