Garcia-Alonso, M.C. and Garcia-Marinoso, B. (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.
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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:||08 Jun 2012 14:20|
|Resource URI:||http://kar.kent.ac.uk/id/eprint/7701 (The current URI for this page, for reference purposes)|
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