Title: Drug pricing behaviour across Central American countries

Authors: Karen Watkins, Mariano Rojas

Addresses: Centro de Investigacion e Inteligencia Economica, Universidad Popular Autonoma del Estado de Puebla, 21 Sur 1103, Barrio de Santiago, CP. 72410, Puebla, Pue., Mexico. ' Centro de Investigacion e Inteligencia Economica, Universidad Popular Autonoma del Estado de Puebla, 21 Sur 1103, Barrio de Santiago, CP. 72410, Puebla, Pue., Mexico

Abstract: This paper studies the behaviour of drug prices over time and across Central American countries. The paper is based on the price co-movement literature, which studies whether prices of some commodities move in a synchronised way over time. Correlations for quarterly pricing information of drugs in 11 therapeutic groups in all six Central American countries are calculated. The main findings show that there are country and firm-specific effects in the co-movement of prices across Central American countries. Furthermore, it is possible to identify a regional drug price co-movement structure that integrates some countries| sub-segments and isolates others. Most price co-movement research has focused on the study of prices of different commodities within a given geographical market; this paper goes beyond the study of price co-movements within single markets – a specific country – to also study price co-movement across well-defined jurisdictional markets – the Central American countries.

Keywords: drug pricing; pricing behaviour; prices; Central America; price co-movements; therapeutic groups; country effects; firm-specific effects; price-discrimination strategies; pharmaceutical companies; integrated country markets; industrial organisation; medicines; synchronised price movements; regional prices; country integration; sub-segmentation; country isolation; commodity prices; single markets; geographical markets; jurisdictional markets; Nicaragua; Panama; El Salvador; Costa Rica; Honduras; Guatemala; behavioural research; healthcare research.

DOI: 10.1504/IJBHR.2011.041050

International Journal of Behavioural and Healthcare Research, 2011 Vol.2 No.3, pp.288 - 306

Published online: 30 Jun 2011 *

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