Title: Global pricing strategies for innovative essential drugs

Authors: Jerome Dumoulin

Addresses: Institut de Recherche Economique sur la Production et le Developpement, Universite Pierre Mendes-France, BP 47, F-38040 Grenoble Cedex, France

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.

Keywords: pharmaceuticals; discrimination prices; parallel imports; compulsory licensing.

DOI: 10.1504/IJBT.2001.000169

International Journal of Biotechnology, 2001 Vol.3 No.3/4, pp.338-349

Published online: 13 Jul 2003 *

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