The determinants of pricing in pharmaceuticals: are US prices really so high?

Cabrales, Antonio; Jiménez-Martín, Sergi

Publication:
The determinants of pricing in pharmaceuticals: are US prices really so high?

dc.affiliation.dpto	UC3M. Departamento de Economía	es
dc.contributor.author	Cabrales, Antonio
dc.contributor.author	Jiménez-Martín, Sergi
dc.contributor.other	FEDEA
dc.date.accessioned	2012-01-09T17:03:06Z
dc.date.available	2012-01-09T17:03:06Z
dc.date.issued	2008-04-18
dc.description.abstract	This paper studies price determination in pharmaceutical markets using data for 25 countries, six years and a comprehensive list of products from the MIDAS IMS database. We show that market power and the quality of the product have a signi¯cantly positive impact of prices. The nationality of the producer appears to have a small and often insigni¯cant impact on prices, which suggests that countries which regulate prices have relatively little power to do it in a way that advances narrow national interest. We produce a theoretical explanation for this phenomenon based on the fact that low negotiated prices in a country would have a knock-on efect in other markets, and is thus strongly resisted by producers. Another key finding is that the U.S. has prices that are not signi¯cantly higher than those of countries with similar income levels. This, together with the former observation on the efect of the nationality of producers casts doubt on the ability of countries to pursue "free-riding" regulation.
dc.description.sponsorship	This study was supported by an unrestricted educational grant from the Merck Company Foundation, the philanthropic arm of Merck & Co. Inc., Whitehouse Station, NJ. Partial funding was also obtained from the Spanish Ministry of Science and Technology under grants SEC2003-03474 and SEJ2005-08783- C04-01. We thank IMS for providing the data.
dc.format.mimetype	application/pdf
dc.identifier.uri	https://hdl.handle.net/10016/12923
dc.language.iso	eng
dc.relation.ispartofseries	Working Papers
dc.relation.ispartofseries	08-18
dc.rights	Atribución-NoComercial-SinDerivadas 3.0 España
dc.rights.accessRights	open access
dc.rights.uri	http://creativecommons.org/licenses/by-nc-nd/3.0/es/
dc.subject.eciencia	Economía
dc.subject.jel	I10
dc.subject.jel	I18
dc.subject.jel	L18
dc.subject.jel	L65
dc.subject.other	Pharmaceutical prices
dc.subject.other	Regulation
dc.title	The determinants of pricing in pharmaceuticals: are US prices really so high?
dc.type	working paper	*
dspace.entity.type	Publication