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Assessing the Impact of Global Price Interdependencies


  • Anke Richter



Documented launch delays and the ensuing debate over their underlying causes have focused on assessment from the individual country’s perspective. Seen in a larger game theoretical framework this may cause problems, because although the countries see an individual game, the pharmaceutical firm sees a repeated linked game. The links are due to external reference pricing and parallel trade. Behaviours that are optimal in the single, individual game (for either the country or the pharmaceutical firm) may no longer be optimal when considering the global repeated game. A theoretical mixed integer linear model of the firm’s launch and pricing decisions is presented along with examples wherein international price dependencies most likely played a role. This model can help countries understand the implication of their external reference pricing policies on the global repeated pricing game. Understanding the behaviour of the pharmaceutical firm in this global context aids countries in designing policies to maximize the welfare of their citizens. Copyright Adis Data Information BV 2008

Suggested Citation

  • Anke Richter, 2008. "Assessing the Impact of Global Price Interdependencies," PharmacoEconomics, Springer, vol. 26(8), pages 649-659, August.
  • Handle: RePEc:spr:pharme:v:26:y:2008:i:8:p:649-659
    DOI: 10.2165/00019053-200826080-00003

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    References listed on IDEAS

    1. A. Hågå & J. M. Sverre, 2002. "Pricing and reimbursement of pharmaceuticals in Norway," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 3(3), pages 215-220, September.
    2. Brekke, Kurt R. & Konigbauer, Ingrid & Straume, Odd Rune, 2007. "Reference pricing of pharmaceuticals," Journal of Health Economics, Elsevier, vol. 26(3), pages 613-642, May.
    3. John Yfantopoulos, 2008. "Pharmaceutical pricing and reimbursement reforms in Greece," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 9(1), pages 87-97, February.
    4. Jean O. Lanjouw, 2005. "Patents, Price Controls and Access to New Drugs: How Policy Affects Global Market Entry," Working Papers 61, Center for Global Development.
    5. Michael Barry & Lesley Tilson & Máirín Ryan, 2004. "Pricing and reimbursement of drugs in Ireland," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 5(2), pages 190-194, May.
    6. Nina Pavcnik, 2002. "Do Pharmaceutical Prices Respond to Potential Patient Out-of-Pocket Expenses?," RAND Journal of Economics, The RAND Corporation, vol. 33(3), pages 469-487, Autumn.
    7. Lopez-Casasnovas, Guillem & Puig-Junoy, Jaume, 2000. "Review of the literature on reference pricing," Health Policy, Elsevier, vol. 54(2), pages 87-123, November.
    8. Livio Garattini & Simone Ghislandi, 2007. "Should we really worry about “launch delays” of new drugs in OECD countries?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 8(1), pages 1-3, March.
    9. Fernando Antoñanzas & Juan Oliva & Mariola Pinillos & Carmelo Juàrez, 2007. "Economic aspects of the new Spanish laws on pharmaceutical preparations," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 8(3), pages 297-300, September.
    10. Izabela Jelovac & Catalina Bordoy, 2005. "Pricing and Welfare Implications of Parallel Imports in the Pharmaceutical Industry," International Journal of Health Economics and Management, Springer, vol. 5(1), pages 5-21, January.
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    Cited by:

    1. Nicolas Houy & Izabela Jelovac, 2015. "Drug Launch Timing and International Reference Pricing," Health Economics, John Wiley & Sons, Ltd., vol. 24(8), pages 978-989, August.
    2. Birg, Laura, 2016. "External reference pricing and the choice of country baskets and pricing rules," Center for European, Governance and Economic Development Research Discussion Papers 279, University of Goettingen, Department of Economics.

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