The strategic interaction between firms and formulary committees: Effects on the prices of new drugs

Garcia-Alonso, Maria D C and Garcia-Marinoso, Begoña (2008) The strategic interaction between firms and formulary committees: Effects on the prices of new drugs. In: 5th World Congress of the International-Health-Economics-Association, July 13th 2005, Barcelona, Spain. (The full text of this publication is not available from this repository)

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Official URL
http://dx.doi.org/10.1016/j.jhealeco.2007.06.003

Abstract

We study the strategic interaction between the pricing decisions of a pharmaceutical firm and the reimbursement decisions of a government agency which grants reimbursement rights to patients for whom new drugs are most cost-effective. If the reimbursement decision precedes pricing, the agency only reimburses some patients if the drug’s private and public health benefits diverge. This is, there are consumption externalities and the variable cost of the drug exceeds the alternative’s. Contrarily, if the firm can commit to a price before reimbursement, a strategic effect implies that by setting a sufficiently high price, the firm can make the agency more willing to reimburse than without commitment.

Item Type: Conference or workshop item (Paper)
Uncontrolled keywords: drug formularies; subsidies
Subjects: H Social Sciences
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Maria Garcia-Alonso
Date Deposited: 14 Mar 2009 11:01
Last Modified: 20 May 2014 13:44
Resource URI: http://kar.kent.ac.uk/id/eprint/7701 (The current URI for this page, for reference purposes)
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