Global pricing strategies for innovative essential drugs
by Jerome Dumoulin
International Journal of Biotechnology (IJBT), Vol. 3, No. 3/4, 2001

Abstract: This paper examines the pricing of essential innovative medicines according to alternative strategies of firms i) either a country-wise price of discrimination according to the revenues of the consumers of these countries; ii) or a single worldwide price. Two counter-strategies by countries' governments are related to these strategies parallel imports and compulsory licensing of patents. For each strategy, firms' profit and affordability of such drugs are calculated with a simulation model. We show that price discrimination maximises both indicators. Despite this result, some firms prefer to set a unique worldwide price, maybe because they are afraid that low priced medicines would find their way onto the black market and end up in the potentially higher price countries.

Online publication date: Sun, 13-Jul-2003

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