Positioning and negotiations

The case of pharmaceutical pricing

Dados Bibliográficos

ID21471002
AutoresSverre Grepperud (0000-0002-8658-7345, University of Oslo), Pål Andreas Pedersen (0000-0003-0092-2518, Nord University, autor correspondente)
Ano2020
Volume62
Páginas101853
Data de publicação2020-03-01
Peer ReviewedSim
Open AccessSim
TipoARTICLE
PeriódicoEuropean Journal of Political Economy (JOURNAL)
Identificadores do periódicoISSN: 0176-2680 • E-ISSN: 1873-5703
EditoraElsevier BV (PUBLISHER)
DOI10.1016/j.ejpoleco.2020.101853
OpenAlexW3000130027
IdiomaEN
Citações recebidas4
Referências citadas33

We study a positioning game prior to negotiations where each party invests into influential activities in order to raise voter support for their preferred bargaining outcome. The case chosen for our analysis is a bilateral monopoly where a purchaser meets a pharmaceutical firm and where the two negotiate on the price of a new and innovative medicine. We identify factors that influence on the negotiated price such as treatment effects of the new and the existing drug, production costs of the new drug, the price of the existing drug, the marginal cost of public funds and patient group size. Furthermore, it is shown that the negotiated price, depending on the characteristics of a political cost function with regard to the influential activities, is influenced by the order of moves taken by the parties. Regardless of the strategic interrelationships between the two parties, likely positioning games to be played are those where one of the two negotiating parties acts as a leader while the rival acts as a follower

Business · Drug prices · Economics · Industrial organization · Microeconomics · Monopoly · Negotiation · Political science · Politics · Public economics · Biosimilars and Bioanalytical Methods · Law · Pharmaceutical Economics and Policy · Pharmaceutical industry and healthcare · Finance · Marketing