Non-Tariff Barriers and Bargaining in Generic Pharmaceuticals
Sharat Ganapati and
Rebecca McKibbin ()
Additional contact information
Rebecca McKibbin: School of Economics, University of Sydney, https://sites.google.com/view/rebeccamckibbin/home
No gueconwpa~18-18-23, Working Papers from Georgetown University, Department of Economics
Pharmaceutical prices are widely dispersed across countries with comparable quality standards. We study two elements of this dispersion; non-tariff barriers and buyer bargaining power. Under monopoly, generic drug prices are 3-4 times higher in the United States. With 6 or more competitors, generic drug prices are similar across countries. Motivated by this, we use a bargaining model to examine two policy solutions to reduce drug prices. First, we remove non-tariff barriers to increase the number of competitors through a reciprocal approval arrangement and market entry. Second, we explore the US government's unexploited purchasing power to negotiate drug prices. Regarding Medicaid, the first measure can reduce total expenditures by 8% and the second by 18%. There is very little additional savings from doing both procedures in tandem.
Keywords: Law of One Price; Competition; Bargaining; Pharmaceuticals; Non-Tariff Barriers; Healthcare Economics; International Trade (search for similar items in EconPapers)
JEL-codes: I11 F14 L44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-hea and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://drive.google.com/uc?export=download&id=1QpJONZopVpv1ev4RPGVhnXaGijIBv5op Full text (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:geo:guwopa:gueconwpa~18-18-23
Ordering information: This working paper can be ordered from
Roger Lagunoff Professor of Economics Georgetown University Department of Economics Washington, DC 20057-1036
Access Statistics for this paper
More papers in Working Papers from Georgetown University, Department of Economics Georgetown University Department of Economics Washington, DC 20057-1036.
Bibliographic data for series maintained by Marcia Suss ().