Pharmaceutical Pricing in a Regulated Market

Abstract

We compare how new pharmaceuticals are priced in the price-regulated Swedish market with how they are priced in the U.S. market, as studied by Lu and Comanor (1998). We collect a data set consisting of all new chemical entities (NCEs) launched in Sweden between 1987 and 1997, and test the same models as Lu and Comanor. In line with their results, we find that introductory prices depend on the degree of therapeutic innovation. Contrary to the results from the U.S. market, Swedish real prices for NCEs fall substantially over time for all classes of therapeutic innovation. Also contrary to the findings of Lu and Comanor, we find no effect of the presence of branded substitutes on either introduction prices or price dynamics. Our results indicate that the price regulation discourages price competition between brandname drugs. © 2003 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

What If There Was a Stronger Pharmaceutical Price Competition in Spain? When Regulation Has a Similar Effect to Collusion

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Growth and Returns to New Products and Pack Varieties: The Case of UK Pharmaceuticals

“…The empirical literature has focused on both the pricing strategies of originators postpatent expiration (Frank and Salkever, 1992, Scherer, 1993, Regan, 2008 as well as on prices of the follow-on and generics (Lu and Comanor, 1998, Ekelund and Persson, 2003, Danzon and Furukawa, 2011, Mueller and Frenzel, 2015. There is a large literature on price discrimination (third degree) and welfare effects (Scherer, 2000, Danzon, 1997, Malueg and Schwartz, 1994 and when in the presence of heterogeneous consumers firms can profitably divide the market in different brand loyal and not-brand loyal groups via advertising to achieve second degree price discrimination (de Frutos et al, 2013).…”