Going through the roof: On prices for drugs sold through insurance

• 成果类型: Article
• 署名作者: Kamphorst, Jurjen; Karamychev, Vladimir A.
• 署名单位: Erasmus University Rotterdam; Erasmus University Rotterdam - Excl Erasmus MC; Tinbergen Institute
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2025.03.006
• 发表日期: 2025
• 页码: 218-242
• 关键词: Monopoly pricing; insurance; Drug pricing; Orphan drugs

摘要

This paper studies public concern grounds for high prices of drugs treating rare and debilitating diseases. We offer a theory that explains how drug indivisibility, individual budget constraints, and insurance interact to drive up drug prices, especially for drugs treating rare and severe diseases. For a broad range of drug production costs and income distributions, our model predicts that drug prices are either set at their highest levels covered by insurance or inversely related to the prevalence of the disease. In the latter case, producer profits decrease with prevalence. The effect of production costs on prices and profits is non-monotonic.