Please use this identifier to cite or link to this item: https://hdl.handle.net/1822/70782

TitlePaying for pharmaceuticals: uniform pricing versus two-part tariffs
Author(s)Brekke, Kurt R.
Dalen, Dag Morten
Straume, Odd Rune
KeywordsPharmaceuticals
Health Plans
Payment schemes
Issue date2021
PublisherUniversidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE)
Abstract(s)Two-part pricing (the Netflix model) has recently been proposed instead of uniform pricing for pharmaceuticals. Under two-part pricing the health plan pays a fixed fee for access to a drug at unit prices equal to marginal costs. Despite two-part pricing being socially efficient, we show that the health plan is worse off when the drug producer is a monopolist, as all surplus is extracted. This result is reversed with competition, as two-part pricing yields higher patient utility and lower drug costs for the health plan. However, if we allow for exclusive contracts, uniform pricing is preferred by the health plan.
TypeWorking paper
URIhttps://hdl.handle.net/1822/70782
Publisher versionhttps://www.eeg.uminho.pt/pt/investigar/nipe/Paginas/publicacoes.aspx
Peer-Reviewedno
AccessOpen access
Appears in Collections:NIPE - Documentos de Trabalho

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