Healthy Skepticism Library item: 14517
Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.
Publication type: Journal Article
Miao-Sheng C, Yu-Ti S.
Pricing of prescription drugs and its impact on physicians' choice behavior.
Health Care Manag Sci 2008 Sep; 11:(3):288-95
http://www.ncbi.nlm.nih.gov/pubmed/18826006
Abstract:
This research presents an analysis of Taiwan’s health care market with the focus on the pricing of prescription drugs and its impact on physicians’ choice behavior. Since the advent of Taiwan’s national health insurance, with the competent authority being Bureau of National Health Insurance (BNHI), hospitals are allowed to sell prescription drugs to patients at prices above the purchasing prices, so each prescription drug has two prices: one at which drugs are sold to hospitals; the other which BNHI reimbursement to hospitals. The margin between the different prices is the sales discount that pharmaceutical companies offer to the hospitals. We find that sales discount has a great impact on physicians’ choice behavior: i.e., physicians are price-sensitive to prescription drugs. In addition, it is found that too high a sales discount of a prescription drug would result in a too low weighted average price of that drug sold; thus BNHI would be more likely to adjust downward the rate it reimbursement to the hospital. This presents a sales strategy problem to pharmaceutical companies. To solve this, we use the distribution of physicians’ evaluations of prescription drugs to establish a profit maximization model in hopes of helping companies to price drugs and find the optimal promotion expending. Ten popular prescription drugs are used in this research as examples.
Keywords:
MeSH Terms:
Choice Behavior
Costs and Cost Analysis
Drug Industry/economics*
Humans
Pharmaceutical Preparations/economics*
Physician's Practice Patterns/economics*
State Health Plans
Taiwan
Substances:
Pharmaceutical Preparations
