Global Framework for Differential Pricing of Pharmaceuticals

Rutger Daems, Edith Maes () and Shyama Ramani ()
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Rutger Daems: Planet Strategy Group
Edith Maes: Maastricht School of Management, and Planet Strategy Group

No 2011-054, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: This paper examines how equitable, differentiated pricing can improve access to and affordability of medicines, particularly in low- and middle-income countries, and how governments and supranational agencies can create an environment that enables pharmaceutical companies to operate a sustainable business model benefitting all key stakeholders. Using value-based pricing techniques in combination with a non-linear function that captures national income parameters as defined in the Human Development Index together with health system variables, the authors have developed an integrated pricing policy framework. The degree to which the proposed framework offers a sustainable solution to the problem of access to medicines depends on: the economic development status of a country, the value of a particular medicine to its therapeutic class and the incidence of the relevant disease, and the extent to which market segmentation can be applied. This paper further argues that for equitable, differential pricing to succeed, policymakers and lawmakers must design and implement a regulatory and legislative framework that prevents leakage through parallel trade and price referencing between affluent and poorer segments when discounts are applied.

Keywords: globalization; pharmaceuticals; pharmaceutical industry; public policy; corporate strategy; pricing; access; equity (search for similar items in EconPapers)
JEL-codes: D43 L11 L65 O12 O15 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:unm:unumer:2011054

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