òòò½Íø Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Reference Pricing as a Deterrent to Entry: Evidence from the European Pharmaceutical Market
òòò½Íø Journal: Microeconomics
(pp. 345–83)
Abstract
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.Citation
Maini, Luca, and Fabio Pammolli. 2023. "Reference Pricing as a Deterrent to Entry: Evidence from the European Pharmaceutical Market." òòò½Íø Journal: Microeconomics 15 (2): 345–83. DOI: 10.1257/mic.20210053Additional Materials
JEL Classification
- L13 Oligopoly and Other Imperfect Markets
- L51 Economics of Regulation
- L65 Chemicals; Plastics; Rubber; Drugs; Biotechnology