Shajarizadeh, Ali and Hollis, Aidan (2014) Price-cap regulation, uncertainty and the price evolution of new pharmaceuticals. Health Economics, 24 (8). pp. 966-977. ISSN 10579230
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Official URL: http://dx.doi.org/10.1002/hec.3075
This paper examines the effect of the regulations restricting price increases on the evolution of pharmaceutical prices. A novel theoretical model shows that this policy leads firms to price new drugs with uncertain demand above the expected value initially. Price decreases after drug launch are more likely, the higher the uncertainty. We empirically test the model's predictions using data from the Canadian pharmaceutical market. The level of uncertainty is shown to play a crucial role in drug pricing strategies.
|Uncontrolled Keywords (separate with ;):||New pharmaceuticals; Price evolution; Price-cap regulation; Pricing strategies; Uncertainty|
|Subjects:||B - Subjects allied to medicine > B700 - Nursing|
|Schools:||Faculty of Health and Wellbeing > School of Health Sciences|
|Deposited By:||Simone Finley|
|Deposited On:||17 Feb 2015 16:13|
|Last Modified:||15 Mar 2017 10:41|
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