On the relationship between the negotiated prices of pharmaceuticals and the patients' co-payment

Izabela Jelovac

Economics Bulletin, 2015, vol. 35, issue 1, 481-493

Abstract: In this paper, we give a new insight on the relationship between the patients' co-payment for buying pharmaceuticals and the price of a patented pharmaceutical. We consider that the price of a pharmaceutical is the outcome of a negotiation between a health authority and a pharmaceutical monopoly producer. We use a model based on bargaining theory to represent this negotiation. The negotiated price is shown to be increasing in the degree of the patients' co-payment. This positive relationship is thus opposite to the negative one prevailing when the price is set by a monopoly without any negotiation. We further analyze the negotiation on the co-payment itself, and show that the optimal degree of the negotiated co-payment is the lowest one.

Keywords: Negotiation; pricing; pharmaceuticals; co-payment; insurance; reimbursement (search for similar items in EconPapers)
JEL-codes: D4 I1 (search for similar items in EconPapers)
Date: 2015-03-11
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Citations: View citations in EconPapers (14)

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Related works:
Working Paper: On the relationship between the negociated price of pharmaceuticals and the patients' co-payment (2015)
Working Paper: On the relationship between the negociated price of pharmaceuticals and the patients' co-payment (2010)
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