External referencing and pharmaceutical price negotiation
García-Mariñoso, Begoña (Comisión del Mercado de las Telecomunicaciones)
Jelovac, Izabela (Université de Lyon)
Olivella, Pau (Universitat Autònoma de Barcelona. Departament d'Economia i d'Història Econòmica)

Date:	2011
Abstract:	External referencing (ER) imposes a price cap for pharmaceuticals based on prices of identical or comparable products in foreign countries. Suppose a foreign country (F) negotiates prices with a pharmaceutical firm while a home country (H) can either negotiate prices independently or implement ER based on the foreign price. We show that country H prefers ER if copayments in H are relatively high. This preference is reinforced when H's population is small. Irrespective of relative country sizes, ER by country H harms country F. Our model is in spired by the wide European experience with this cost containment policy. Namely, in Europe, drug authorization and price negotiations are carried out by separate agencies. We confirm our main results in two extensions. The first one allows for therapeutic competition between drugs. In the second one, drug authorization and price negotiation take place in a single agency.
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Language:	Anglès
Document:	Article ; recerca ; Versió acceptada per publicar
Subject:	Pharmaceuticals ; External referencing ; Price negotiation
Published in:	Health economics, Vol. 20, Núm. 6 (2011) , p. 737-756, ISSN 1099-1050

DOI: 10.1002/hec.1630

Postprint 39 p, 639.3 KB

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