On insurance and the cost-sharing of pharmaceutical R&D

• Authors: Pedro Pita Barros and Xavier Martínez-Giralt.
• BSE Working Paper: 293 | September 15
• Keywords: Ramsey pricing , coinsurance.
• Ramsey pricing
• coinsurance.

Ramsey pricing has been proposed in the pharmaceutical industry as a principle to price discriminate among markets while allowing to recover the (fixed) R&D cost. However, such analyses neglect the presence of insurance or the fund raising costs for drug reimbursement. By incorporating these new elements, we aim at providing some building blocks towards an economic theory merging Ramsey pricing, equity concerns by governments and the strategic incentives, as governments also determine the reimbursement level in countries with a NHS-like system. This will have important implications to the application of Ramsey pricing principles to pharmaceutical products across countries.