Reference pricing as a deterrent to entry evidence from the European pharmaceutical market by Luca Maini and Fabio Pammolli
By: Maini, Luca
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Contributor(s): Pammolli, Fabio.
Material type: 
ArticleSubject(s): MEDICAMENTOS | PRECIOS | MERCADO | OLIGOPOLIOS | EUROPA | MODELOS ECONOMETRICOS
In:
American Economic Journal : Microeconomics v. 15, n. 2, May 2023, p. 345-383Summary: External reference pricing (ERP), the practice of benchmarking domestic drug prices to foreign prices, generates an incentive for firms to withhold products from low-income countries. Using a novel moment inequality approach, we estimate a structural model to measure how ERP policies affect access to innovative drugs across Europe. We find that ERP increases entry delays in eight low-income European countries by up to one year per drug. The European Union could remove these delays without replacing ERP by compensating firms through lump-sum transfers at the cost of around €18 million per drug.
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| Artículos | IEF | IEF | OP 2136/2023/2-1 (Browse shelf) | Available | OP 2136/2023/2-1 |
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Resumen.
External reference pricing (ERP), the practice of benchmarking domestic drug prices to foreign prices, generates an incentive for firms to withhold products from low-income countries. Using a novel moment inequality approach, we estimate a structural model to measure how ERP policies affect access to innovative drugs across Europe. We find that ERP increases entry delays in eight low-income European countries by up to one year per drug. The European Union could remove these delays without replacing ERP by compensating firms through lump-sum transfers at the cost of around €18 million per drug.
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