TY - JOUR
T1 - On international cost-sharing of pharmaceutical R&D
AU - Barros, Pedro Pita
AU - Martinez-Giralt, Xavier
PY - 2008/6/20
Y1 - 2008/6/20
N2 - Ramsey pricing has been proposed in the pharmaceutical industry as a principle to price discriminate among markets while allowing to recover the (fixed) R&D cost. However, such analyses neglect the presence of insurance or the fund raising costs for most of drug reimbursement. By incorporating these new elements, we aim at providing some building blocks towards an economic theory incorporating Ramsey pricing and insurance coverage. We show how coinsurance affects the optimal prices to pay for the R&D investment. We also show that under certain conditions, there is no strategic incentive by governments to set coinsurance rates in order to shift the financial burden of R&D. This will have important implications to the application of Ramsey pricing principles to pharmaceutical products across countries. © Springer Science+Business Media, LLC 2008.
AB - Ramsey pricing has been proposed in the pharmaceutical industry as a principle to price discriminate among markets while allowing to recover the (fixed) R&D cost. However, such analyses neglect the presence of insurance or the fund raising costs for most of drug reimbursement. By incorporating these new elements, we aim at providing some building blocks towards an economic theory incorporating Ramsey pricing and insurance coverage. We show how coinsurance affects the optimal prices to pay for the R&D investment. We also show that under certain conditions, there is no strategic incentive by governments to set coinsurance rates in order to shift the financial burden of R&D. This will have important implications to the application of Ramsey pricing principles to pharmaceutical products across countries. © Springer Science+Business Media, LLC 2008.
KW - Coinsurance
KW - Ramsey pricing
U2 - https://doi.org/10.1007/s10754-008-9042-2
DO - https://doi.org/10.1007/s10754-008-9042-2
M3 - Article
VL - 8
SP - 301
EP - 312
JO - International Journal of Health Care Finance and Economics
JF - International Journal of Health Care Finance and Economics
SN - 1389-6563
ER -