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dc.contributor.authorBrekke, Kurt Richard
dc.contributor.authorKönigbauer, Ingrid
dc.contributor.authorStraume, Odd Rune
dc.date.accessioned2006-07-04T10:15:49Z
dc.date.available2006-07-04T10:15:49Z
dc.date.issued2005-11
dc.identifier.issn0804-6824
dc.identifier.urihttp://hdl.handle.net/11250/162720
dc.description.abstractWe consider a therapeutic market with potentially three pharmaceutical firms. Two of the firms offer horizontally differentiated brand-name drugs. One of the brand-name drugs is a new treatment under patent protection that will be introduced, if the profits are sufficient to cover the entry costs. The other brand-name drug has already lost its patent and faces competition from a third firm offering a generic version perceived to be of lower quality. This model allows us to compare generic reference pricing (GRP), therapeutic reference pricing (TRP), and no reference pricing (NRP). We show that competition is strongest under TRP, resulting in the lowest drug prices (and medical expenditures). However, TRP also provides the lowest profits to the patent-holding firm, making entry of the new drug treatment least likely. Surprisingly, we find that GRP distorts drug choices most, exposing patients to higher health risks.en
dc.format.extent327748 bytes
dc.format.mimetypeapplication/pdf
dc.language.isoengen
dc.publisherNorwegian School of Economics and Business Administration. Department of Economicsen
dc.relation.ispartofseriesDiscussion paperen
dc.relation.ispartofseries2005:25en
dc.subjectpharmaceuticalsen
dc.subjectreference pricingen
dc.subjectproduct differentiationen
dc.titleReference pricing of pharmaceuticalsen
dc.typeWorking paperen


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