Launching prices for new pharmaceuticals in heavily regulated and subsidized markets
AbstractThis paper provides empirical evidence on the explanatory factors affecting introductory prices of new pharmaceuticals in a heavily regulated and highly subsidized market. We collect a data set consisting of all new chemical entities launched in Spain between 1997 and 2005, and model launching prices. We found that, unlike in the US and Sweden, therapeutically "innovative" products are not overpriced relative to "imitative" ones. Price setting is mainly used as a mechanism to adjust for inflation independently of the degree of innovation. The drugs that enter through the centralized EMA approval procedure are overpriced, which may be a consequence of market globalization and international price setting.
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Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1322.
Date of creation: May 2012
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Web page: http://www.econ.upf.edu/
pharmaceuticals; price competition; price regulation;
Find related papers by JEL classification:
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology
- I10 - Health, Education, and Welfare - - Health - - - General
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-01 (All new papers)
- NEP-COM-2012-07-01 (Industrial Competition)
- NEP-HEA-2012-07-01 (Health Economics)
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