Pharmaceutical Cost-Sharing Systems and Savings for Health Care Systems from Parallel Trade

Birg, Laura

doi:10.2139/ssrn.2368416

Cited by 4 publications

(6 citation statements)

References 20 publications

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“…The model set-up followsGanslandt & Maskus (2007) and Birg (2017) 3. Assuming that patients attribute a lower quality to the parallel import due to di¤erences in appearance and packaging yields qualitatively similar results 4.…”

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confidence: 92%

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Parallel Imports and Manufacturer Rebates: Evidence from Germany

Birg

2019

SSRN Journal

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In this paper, I study the e¤ect of a change in the mandatory manufacturer rebate on wholesale prices for pharmaceuticals on competition by parallel imports. First, I analyze the e¤ect of a manufacturer rebate on competition by parallel imports in a two-country model. An increase in the manufacturer rebate increases the market share of parallel imports. Second, I exploit a policy reform in Germany in 2010 that increased the manufacturer rebate by 10 percentage points. Using a data set with prescription drugs with competition from parallel imports, I estimate the e¤ect of the change in the manufacturer rebate on competition by parallel imports. Estimation results suggest that an increase in the manufacturer rebate has increased the market share of parallel imports.

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confidence: 92%

“…Assume that patients consider both versions to be identical, i.e. patients do not observe sourcing or they do not care 3 .…”

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Parallel Imports and Manufacturer Rebates: Evidence from Germany

Birg

2019

SSRN Journal

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“…By inducing price reductions and creating cross-country price di¤erences, regulatory di¤erences may drive the direction and volume of parallel trade ‡ows 2 . For instance, Costa-Font (2016) shows that parallel imports ‡ows are driven among others by cross-country di¤erences in statutory distribution margins.…”

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confidence: 99%

“…rules of copayment and reimbursement, seem to be an important factor in determining the e¤ect of parallel trade (Kanavos et al, 2004;Enemark et al, 2006, Birg, 2018). 2 Whether parallel trade is induced by regulatory di¤erences, may also a¤ect the welfare consequences of parallel trade, as Jelovac & Bordoy (2005) show. Brekke et al (2015) show that stricter price regulation (in the form of price caps) reduces competition from parallel imports.…”

Section: Introductionmentioning

confidence: 99%

Reference Pricing and Parallel Imports: Evidence from Germany

Birg

2019

SSRN Journal

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I study the e¤ect of reference pricing on competition by parallel imports, in particular the market share of parallel imports and the number of parallel traders. First, I analyze the e¤ect of reference pricing on competition by parallel imports in a vertical di¤erentiation model with a locally sourced version and a parallel import o¤ered by n identical parallel traders. Second, I explore the e¤ect of reference pricing on competition by parallel imports using a dataset with prescription drugs with competition from parallel imports. Both model and estimation results suggest that the introduction of reference pricing inreases the market share of the parallel import and the number of parallel traders, while a decrease in the reference price decreases the market share of the parallel import and the number of parallel traders.

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“…Indeed, the low‐WTP countries may have no access to new drugs, and high‐WTP countries may thus have no benefit from referencing the price of low‐WTP countries. In the context of parallel trade, (Birg, ) provides another argument against the harmonisation of EU drug reimbursement policies, because reimbursement systems have different effects in source and destination countries of parallel imports and harmonisation would result in welfare losses in source and/or destination countries. Conversely, (Birg, ) provides an argument in favour of coordinating coinsurance rates in the EU: both increase competition and mitigate a double marginalisation problem caused by parallel imports.…”

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confidence: 99%

Comparing approval procedures for new drugs

Houy

Jelovac

2018

World Economy

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K E Y W O R D Saccess to new drugs, drug approval, international reference pricing 1 | INTRODUCTION This paper analyses how drug approval procedures influence the incentives of pharmaceutical firms to commercialise new drugs in different countries under international reference pricing. The general focus is on the exogenous timing of drug approvals, the endogenous choice of countries for the launches of new drugs and the regulated pricing of drugs. We also analyse in a simple framework the preferences of countries for approval procedures.Before commercialising a new drug on a market, a pharmaceutical firm must satisfy some regulatory constraints. One important compulsory step is to obtain a drug approval (or marketing authorisation). This drug approval depends on the proof that the new drug complies with safety, quality and efficacy standards. In the US, the Food and Drug Administration is in charge of approving new drugs. In the EU, four alternative procedures coexist for drug approval: the centralised procedure, the decentralised procedure, the national procedure and the mutual recognition procedure (Eudralex, 2013). Since 1995, a centralised procedure allows firms to submit a single application to the European Medicines Agency (EMA) to obtain a centralised drug approval valid in all EU countries, Iceland, Liechtenstein and Norway. 1 The decentralised procedure may be used to obtain a drug approval in several Member States when the applicant does not yet have a drug approval in any country. The national procedure is used to obtain a drug approval in one country at a time or in the initial phase of the mutual recognition procedure. The mutual recognition procedure is used to request a drug approval in EU countries for products that have already received approvals in other EU countries.The distinctive feature between these procedures that motivates our analysis is whether the drug is approved simultaneously in all countries or not. In the case of the EU, only the centralised procedure guarantees a simultaneous drug approval in all EU countries. In the alternative three noncentralised procedures, new drugs do not necessarily obtain an approval simultaneously in all countries. Once a drug approval is obtained, a drug producer can start commercialising its new 1 The centralised procedure is compulsory for all medicines derived from biotechnology and other high-tech processes, as well as for human medicines for the treatment of HIV/AIDS, cancer, diabetes, neurodegenerative diseases, autoimmune and other immune dysfunctions, and viral diseases, and for veterinary medicines for use for growth or yield enhancers. The centralised procedure is also open to products that bring a significant therapeutic, scientific or technical innovation, or is in any other respect in the interest of patient or animal health. As a result, the majority of genuinely novel medicines are authorised through the EMA.

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Pharmaceutical Cost-Sharing Systems and Savings for Health Care Systems from Parallel Trade

Cited by 4 publications

References 20 publications

Parallel Imports and Manufacturer Rebates: Evidence from Germany

Parallel Imports and Manufacturer Rebates: Evidence from Germany

Reference Pricing and Parallel Imports: Evidence from Germany

Comparing approval procedures for new drugs

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