Access to Medicines and European Market Integration

IMT Lucca EIC Working Paper Series 01/2016

24 Pages Posted: 18 Jan 2016 Last revised: 19 Jan 2016

See all articles by Fabio Pammolli

Fabio Pammolli

Polytechnic University of Milan - Department of Management, Economics and Industrial Engineering; CERM Foundation

Armando Rungi

IMT School for Advanced Studies - Lucca

Date Written: January 9, 2016

Abstract

In this paper we document a process of price convergence in the European market for pharmaceutical products and relate it to access to innovative medicines in individual countries. The EU is a peculiar case study, where free circulation of goods coexists with pricing policies designed and implemented by Member States. Thanks to a unique census database on product sales and launches for fifteen EU countries, we detect a process of price convergence, both in nominal and in real terms. Therefore, we find that a faster rate of price convergence and a lower income per capita are associated with stronger delays in launches of new medicines. Moreover, country delays tend to be higher for innovative and first in class chemical compounds. Our results suggest that inefficiencies arise from drugs regulation, when countries widely differ in income per capita, public finance sustainability conditions, and regulatory frameworks. Policies of external reference pricing tend to exacerbate welfare losses. A policy of differential pricing is suggested, in order to take into account both therapeutic value and willingness to pay at the country level.

Keywords: economic integration, price convergence, product launches, European Single Market, healthcare, pharmaceutical industry, pricing

JEL Classification: F15, I11, L65, L11, L51

Suggested Citation

Pammolli, Fabio and Rungi, Armando, Access to Medicines and European Market Integration (January 9, 2016). IMT Lucca EIC Working Paper Series 01/2016, Available at SSRN: https://ssrn.com/abstract=2717501 or http://dx.doi.org/10.2139/ssrn.2717501

Fabio Pammolli

Polytechnic University of Milan - Department of Management, Economics and Industrial Engineering ( email )

Via Lambruschini 4C - building 26/A
Milano, 20156
Italy

CERM Foundation ( email )

Via Fiorentina, 1
Siena, Siena 53100
Italy

HOME PAGE: http://www.cermlab.it

Armando Rungi (Contact Author)

IMT School for Advanced Studies - Lucca ( email )

Piazza S. Francesco 19
Lucca, IT-55100
Italy

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