By David M. Cutler, Alan M. Garber
This sequence from the NBER offers new examine by way of major economists on present overall healthiness care coverage matters. The papers during this 7th quantity, initially awarded on the annual Frontiers in health and wellbeing coverage learn convention held in Washington D.C. in the summertime of 2003, replicate the commercial demanding situations confronted through policymakers and well-being care pros in an age of funds deficits. subject matters mentioned comprise prescription drug merits as a stand-alone element of Medicare, incapacity charges and Medicare expenses, and conversion to for-profit overall healthiness plans.
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2 NL and NZ molecule prices and RPs relative to Germany, by German price, 1998. 26 Danzon and Ketcham Reference Pricing of Pharmaceuticals for Medicare 27 Germany. We use Germany as the benchmark because it has the most molecules and because its price distribution is expected to reflect potential free market prices more closely. For the Netherlands, the median RPs are 1 to 3 percent higher than the German RPs for products in the lower and upper halves of the price distribution. 01). This finding suggests that the Dutch Maximum Price regulations were more binding for lower-priced molecules, possibly because generics are included in calculating the price ceiling.
22 RPs, Prices, and Generic Competition RP is often rationalized as a mechanism to stimulate competition (see, for example, Kletchko, Moore, and Jones 1995) because the payer pays the same price for all products in a cluster. The monopolistic competition model implies that firms that previously priced above the RP would likely reduce their prices to the RP, while firms that previously priced below the RP may increase their prices, leading to a convergence of prices on the RP. Dynamic downward pressure on prices is not expected except where other programs create incentives or constraints for pricing below the RP, such as Germany’s physician drug budgets or New Zealand’s requirement for price cuts from new entrants.
The reference price systems in our three countries are expected to exacerbate their relative attractiveness as markets for new compounds based solely on market size. Germany’s RP system created negligible, if any, disincentive to the launch of new compounds because Germany defined clusters relatively narrowly and new patented products were exempt from RP after 1996. New Zealand’s RP system is expected to 16 Danzon and Ketcham have the most negative effect on the launch of new compounds, particularly potentially high-priced compounds, because New Zealand has the broadest criteria for defining product clusters and usually requires the manufacturer of a new product to offer a price below the established RP as a condition of being reimbursed in that cluster (or give a price cut in another cluster).
Frontiers in Health Policy Research by David M. Cutler, Alan M. Garber