Reference Pricing Versus Co-Payment in the Pharmaceutical Industry: Firm's Pricing Strategies

Marisa Miraldo ()

No 027cherp, Working Papers from Centre for Health Economics, University of York

Abstract: Within a horizontally differentiation model and allowing for heterogeneous qualities, we analyze the effects of reference pricing reimbursement on firms’ pricing strategies. With this analysis we find inherent incentives for firms’ pricing behaviour, and consequently we shed some light on time consistency of such policy. The analysis encompasses different reference price rules. Results show that if drugs have equal quality, reference pricing may lead to higher prices. With quality differentiation both the minimum and linear policies unambiguously lead to higher prices.

New Economics Papers: this item is included in nep-hea, nep-ind and nep-mic
Date: Written
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http://www.york.ac.uk/inst/che/pdf/rp27.pdf First version, 2007 (application/pdf)

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Persistent link: http://EconPapers.repec.org/RePEc:chy:respap:27cherp

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