The pricing of breakthrough drugs: theory and policy implications.
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ABSTRACT:
SUBMITTER: Levy M
PROVIDER: S-EPMC4244177 | biostudies-literature | 2014
REPOSITORIES: biostudies-literature
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The pricing of breakthrough drugs: theory and policy implications.
Levy Moshe M Rizansky Nir Adi A
PloS one 20141125 11
Pharmaceutical sales exceed $850 billion a year, of which 84% are accounted for by brand drugs. Drug prices are the focus of an ongoing heated debate. While some argue that pharmaceutical companies exploit monopolistic power granted by patent protection to set prices that are "too high", others claim that these prices are necessary to motivate the high R&D investments required in the pharmaceutical industry. This paper employs a recently documented utility function of health and wealth to derive ...[more]
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Project description:BackgroundMany European countries introduced (confidential) rebates in the past years. Authorities and manufacturers argue that this strategy allows reduction of spending on high-cost drugs, and quick access of innovative drugs. We evaluated these arguments using Switzerland as an example, one of the last countries with transparent rebates.MethodsWe identified all drugs granted rebates in Switzerland and all new drugs without rebates between January 2012 and October 2020. We assessed the amount of introduced drugs with and without rebates over time, clinical benefit of drugs with rebates, and duration between approval and price determination.FindingsOur study cohort included 51 drugs with rebates, the majority were cancer drugs (32; 63%). 15/51 (29%) had high clinical benefit, 25/51 (49%) low benefit and for 11/51 (22%) benefit could not be assessed. The number of drugs with rebates increased in recent years. Time duration between approval and price determination was 302 days in median for drugs with and 106 days for drugs without rebates.InterpretationDrugs with rebates may hamper access to drugs and lead to overpayment. Improving transparency on actual drug prices and stronger cooperation between countries could help national authorities to make better informed pricing decisions, and improve access of innovative drugs to patients.FundingThis study was partially funded by the Swiss Cancer Research Foundation (Krebsforschung Schweiz) and the Swiss National Foundation (SNF).
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Project description:This paper tests whether a series of changes to capital requirements transmitted to a change to banks' pricing policy. We compile a rich bank-level supervisory dataset covering the banking sector in the Czech Republic over the period 2004-2019. We estimate that the changes to the overall capital requirements did not force banks to alter their pricing policy. The impact on bank interest margins and loan rates is found to lie in a narrow range around zero irrespective of loan category. Our estimates allow us to rule out effects even for less-capitalised banks and small banks. The results obtained contradict estimates from other studies reporting significant transmission of capital regulation to lending rates and interest margins. We therefore engage in a deeper discussion of why this might be the case. Our estimates may be used in the ongoing discussion of the benefits and costs of capital-based regulation in banking.Supplementary informationThe online version contains supplementary material available at 10.1007/s11149-022-09448-5.
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