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Article
On international cost-sharing of pharmaceutical R&D
International Journal of Health Care Finance and Economics (2008)
  • Pedro P. Barros, Universidade Nova de Lisboa
  • Xavier Martinez-Giralt, Universitat Autonoma de Barcelona
Abstract

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.

Disciplines
Publication Date
2008
Citation Information
Pedro P. Barros and Xavier Martinez-Giralt. "On international cost-sharing of pharmaceutical R&D" International Journal of Health Care Finance and Economics Vol. 8 Iss. 4 (2008)
Available at: http://works.bepress.com/xavier_martinez_giralt/24/