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The drug bargaining game: Pharmaceutical regulation in Australia, CHERE Discussion Paper No 51

Author

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  • Donald J Wright

    (Department of econoics, University of Sydney)

Abstract

Many 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.

Suggested Citation

  • Donald J Wright, 2002. "The drug bargaining game: Pharmaceutical regulation in Australia, CHERE Discussion Paper No 51," Discussion Papers 51, CHERE, University of Technology, Sydney.
  • Handle: RePEc:her:chedps:51
    as

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    File URL: http://www.chere.uts.edu.au/pdf/dp51.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Pharmaceuticals; Australia;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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