On insurance and the cost-sharing of pharmaceutical R&D

Pedro Barros and Xavier Martinez-Giralt

No 293, Working Papers from Barcelona School of Economics

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 drug reimbursement. By incorporating these new elements, we aim at providing some building blocks towards an economic theory merging Ramsey pricing, equity concerns by governments and the strategic incentives, as governments also determine the reimbursement level in countries with a NHS-like system. This will have important implications to the application of Ramsey pricing principles to pharmaceutical products across countries.

Keywords: Ramsey pricing; coinsurance. (search for similar items in EconPapers)
Date: 2006-09
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