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On the relationship between the negociated price of pharmaceuticals and the patients' co-payment

Listed author(s):
  • Izabela Jelovac

    (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)

In this paper, we give a new insight on the relationship between the patients' co-payment for buying pharmaceuticals and the price of a patented pharmaceutical. We consider that the price of a pharmaceutical is the outcome of a negotiation between a health authority and a pharmaceutical monopoly producer. We use a model based on bargaining theory to represent this negotiation. The negotiated price is shown to be increasing in the degree of the patients' co-payment. This positive relationship is thus opposite to the negative one prevailing when the price is set by a monopoly without any negotiation. We further analyze the negotiation on the co-payment itself, and show that the optimal degree of the negotiated co-payment is the lowest one.

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Paper provided by HAL in its series Post-Print with number halshs-00588703.

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Date of creation: 24 Jun 2010
Publication status: Published in Séminaire GAEL, Grenoble, 24 juin 2010, Jun 2010, Grenoble, France
Handle: RePEc:hal:journl:halshs-00588703
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00588703
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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  1. 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.
  2. Puig-Junoy, Jaume, 2004. "Incentives and pharmaceutical reimbursement reforms in Spain," Health Policy, Elsevier, vol. 67(2), pages 149-165, February.
  3. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475, December.
  4. Tom Stargardt, 2011. "Modelling pharmaceutical price changes in Germany: a function of competition and regulation," Applied Economics, Taylor & Francis Journals, vol. 43(29), pages 4515-4526.
  5. repec:dau:papers:123456789/5987 is not listed on IDEAS
  6. Brekke, Kurt R. & Grasdal, Astrid L. & Holms, Tor Helge, 2009. "Regulation and pricing of pharmaceuticals: Reference pricing or price cap regulation?," European Economic Review, Elsevier, vol. 53(2), pages 170-185, February.
  7. Boris Augurzky & Silja Göhlmann & Stefan Greß & Jürgen Wasem, 2009. "Effects of the German reference drug program on ex-factory prices of prescription drugs: a panel data approach," Health Economics, John Wiley & Sons, Ltd., vol. 18(4), pages 421-436.
  8. Brekke, Kurt R. & Holmas, Tor Helge & Straume, Odd Rune, 2011. "Reference pricing, competition, and pharmaceutical expenditures: Theory and evidence from a natural experiment," Journal of Public Economics, Elsevier, vol. 95(7), pages 624-638.
  9. 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.
  10. Pedro Barros & Xavier Martinez-Giralt, 2008. "On international cost-sharing of pharmaceutical R&D," International Journal of Health Economics and Management, Springer, vol. 8(4), pages 301-312, December.
  11. Matteo Galizzi & Simone Ghislandi & Marisa Miraldo, 2011. "Effects of Reference Pricing in Pharmaceutical Markets," PharmacoEconomics, Springer, vol. 29(1), pages 17-33, January.
  12. 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.
  13. Patricia Danzon, 1997. "Price Discrimination for Pharmaceuticals: Welfare Effects in the US and the EU," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 4(3), pages 301-322.
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