Reference pricing with elastic demand for pharmaceuticals

Detalhes bibliográficos
Autor(a) principal: Gonçalves, Ricardo
Data de Publicação: 2016
Outros Autores: Rodrigues, Vasco
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
Texto Completo: http://hdl.handle.net/10400.14/21026
Resumo: In this paper, we re‐examine the properties of two commonly adopted government reimbursement schemes for pharmaceuticals: reference pricing and fixed percentage reimbursement. We depart from the previous literature by assuming that the individual demand is price‐sensitive and depends on the copayment rate (i.e., the part paid by each consumer). We obtain two novel results under reference pricing: first, as the copayment rate increases, so do pharmaceutical prices; second, this increase in pharmaceutical prices reduces social welfare. Whilst reference pricing does emerge as a preferable reimbursement scheme, demand elasticities and the copayment rate interact in complex ways. This leads (unexpectedly) to the possibility that a higher copayment rate (lower reimbursement rate) results in higher government expenditure.
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spelling Reference pricing with elastic demand for pharmaceuticalsPharmaceutical reimbursement schemesCopayment ratesIn this paper, we re‐examine the properties of two commonly adopted government reimbursement schemes for pharmaceuticals: reference pricing and fixed percentage reimbursement. We depart from the previous literature by assuming that the individual demand is price‐sensitive and depends on the copayment rate (i.e., the part paid by each consumer). We obtain two novel results under reference pricing: first, as the copayment rate increases, so do pharmaceutical prices; second, this increase in pharmaceutical prices reduces social welfare. Whilst reference pricing does emerge as a preferable reimbursement scheme, demand elasticities and the copayment rate interact in complex ways. This leads (unexpectedly) to the possibility that a higher copayment rate (lower reimbursement rate) results in higher government expenditure.WileyVeritati - Repositório Institucional da Universidade Católica PortuguesaGonçalves, RicardoRodrigues, Vasco2016-12-13T17:46:07Z20182018-01-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10400.14/21026engGonçalves, R., & Rodrigues, V. (2018). Reference Pricing with Elastic Demand for Pharmaceuticals. The Scandinavian Journal of Economics, 120(1), 159–182. https://doi.org/10.1111/sjoe.122070347-052010.1111/sjoe.122071467-944285039745828000419119200006info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-09-26T01:42:22Zoai:repositorio.ucp.pt:10400.14/21026Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T18:16:51.454826Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse
dc.title.none.fl_str_mv Reference pricing with elastic demand for pharmaceuticals
title Reference pricing with elastic demand for pharmaceuticals
spellingShingle Reference pricing with elastic demand for pharmaceuticals
Gonçalves, Ricardo
Pharmaceutical reimbursement schemes
Copayment rates
title_short Reference pricing with elastic demand for pharmaceuticals
title_full Reference pricing with elastic demand for pharmaceuticals
title_fullStr Reference pricing with elastic demand for pharmaceuticals
title_full_unstemmed Reference pricing with elastic demand for pharmaceuticals
title_sort Reference pricing with elastic demand for pharmaceuticals
author Gonçalves, Ricardo
author_facet Gonçalves, Ricardo
Rodrigues, Vasco
author_role author
author2 Rodrigues, Vasco
author2_role author
dc.contributor.none.fl_str_mv Veritati - Repositório Institucional da Universidade Católica Portuguesa
dc.contributor.author.fl_str_mv Gonçalves, Ricardo
Rodrigues, Vasco
dc.subject.por.fl_str_mv Pharmaceutical reimbursement schemes
Copayment rates
topic Pharmaceutical reimbursement schemes
Copayment rates
description In this paper, we re‐examine the properties of two commonly adopted government reimbursement schemes for pharmaceuticals: reference pricing and fixed percentage reimbursement. We depart from the previous literature by assuming that the individual demand is price‐sensitive and depends on the copayment rate (i.e., the part paid by each consumer). We obtain two novel results under reference pricing: first, as the copayment rate increases, so do pharmaceutical prices; second, this increase in pharmaceutical prices reduces social welfare. Whilst reference pricing does emerge as a preferable reimbursement scheme, demand elasticities and the copayment rate interact in complex ways. This leads (unexpectedly) to the possibility that a higher copayment rate (lower reimbursement rate) results in higher government expenditure.
publishDate 2016
dc.date.none.fl_str_mv 2016-12-13T17:46:07Z
2018
2018-01-01T00:00:00Z
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv http://hdl.handle.net/10400.14/21026
url http://hdl.handle.net/10400.14/21026
dc.language.iso.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv Gonçalves, R., & Rodrigues, V. (2018). Reference Pricing with Elastic Demand for Pharmaceuticals. The Scandinavian Journal of Economics, 120(1), 159–182. https://doi.org/10.1111/sjoe.12207
0347-0520
10.1111/sjoe.12207
1467-9442
85039745828
000419119200006
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dc.publisher.none.fl_str_mv Wiley
publisher.none.fl_str_mv Wiley
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