IDEAS home Printed from
   My bibliography  Save this article

Pharmaceutical R&D in the Setting of Incomplete European Integration


  • Peter Kotzian


The article analyzes the consequences of national price regulation for newly developed medicines in the setting of a partially integrated EU-wide market for pharmaceuticals and strategic entry-decisions by pharmaceutical enterprises. EU member states can be seen as jointly contributing to financing R&D conducted by the pharmaceutical industry. The article derives and compares the welfare implications of three regimes to organize this kind of collective action. First, a situation in which each government of a EU member state grants the price for a medicine it thinks appropriate, oriented solely at domestic considerations, but there is no spill over of prices among national markets. Second, the current situation in the EU of introduced tradability for medicines while price setting remained a national competence. Third, the possible situation of a centralized price setting procedure leading to a single price with compensations for those member states unable to pay this European price. The article argues that the process of EU integration in pharmaceuticals has left an optimal state without reaching another optimal one, but is instead stuck in a state of diminished welfare for all parties concerned.

Suggested Citation

  • Peter Kotzian, 2004. "Pharmaceutical R&D in the Setting of Incomplete European Integration," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 11(2), pages 175-195.
  • Handle: RePEc:taf:ijecbs:v:11:y:2004:i:2:p:175-195
    DOI: 10.1080/1357151042000222519

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Scharpf, Fritz W., 1991. "Koordination durch Verhandlungssysteme: Analytische Konzepte und institutionelle Lösungen am Beispiel der Zusammenarbeit zwischen zwei Bundesländern," MPIfG Discussion Paper 91/4, Max Planck Institute for the Study of Societies.
    2. Frank R. Lichtenberg, 1998. "Pharmaceutical Innovation, Mortality Reduction, and Economic Growth," NBER Working Papers 6569, National Bureau of Economic Research, Inc.
    3. repec:ohe:monogr:000430 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:ijecbs:v:11:y:2004:i:2:p:175-195. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.