Healthy Skepticism Library item: 8789

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

Ellison SF, Wolfram C.
Coordinating on lower prices: pharmaceutical pricing under political pressure.
Rand J Econ 2006 Sum; 37:(2):324-40
http://www.ncbi.nlm.nih.gov/entrez/query.fcgi?db=pubmed&cmd=Retrieve&dopt=AbstractPlus&list_uids=17290546&query_hl=6&itool=pubmed_DocSum

Abstract:

We investigate the effects of political activity on pharmaceutical prices, focusing on the health care reform period in the early 1990s.We characterize firms based on their vulnerability to future price regulation and find that the more vulnerable firms were more likely to take various actions to forestall regulation, most notably coordinating on a specific percentage price increase during 1993. Since moderating price increases could have averted regulation, the coordination appears to be the industry’s response to a collective action problem.

Keywords:
Publication Types: Research Support, U.S. Gov't, Non-P.H.S. MeSH Terms: Costs and Cost Analysis*/economics Costs and Cost Analysis*/trends Drug Costs*/trends Drug Industry/economics* Economics, Pharmaceutical*/trends Forecasting Government Regulation* Health Care Reform/economics Humans Models, Economic Politics* United States