Externalities of national pharmaceutical policy when markets are integrated through parallel trade

Laura Birg

VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association

Abstract: This paper studies externalities of nationally determined cost-sharing systems, in particular coinsurance rates (patients pay a percentage of the price), under pharmaceutical parallel trade, i.e. trade outside the manufacturer's authorized distribution channel, in a two-country model with a vertical distributor relationship. Parallel trade generates a price-decreasing competition effect in the destination country and a price-increasing double marginalization effect in the source country. An increase of the coinsurance rates in the destination country of the parallel import mitigates the double marginalization effect in the source country. An increase of the coinsurance rate in the source country reinforces the competition effect in the destination country.

JEL-codes: F12 I11 I18 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-hea and nep-int
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https://www.econstor.eu/bitstream/10419/79720/1/VfS_2013_pid_683.pdf (application/pdf)

Related works:
Journal Article: Externalities of National Pharmaceutical Policy when Markets are Integrated through Parallel Trade (2015)
Working Paper: Externalities of national pharmaceutical policy when markets are integrated through parallel trade (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc13:79720

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