Differential pricing of new pharmaceuticals in lower income European countries

Abstract

Pharmaceutical companies adjust the pricing strategy of innovative medicines to the imperatives of their major markets. The ability of payers to influence the ex-factory price of new drugs depends on country population size and income per capita, among other factors. Differential pricing based on Ramsey principles is a ‘second-best’ solution to correct the imperfections of the global market for innovative pharmaceuticals, and it is also consistent with standard norms of equity. This analysis summarizes the boundaries of differential pharmaceutical pricing for policymakers, payers and other stakeholders in lower-income countries, with special focus on Central-Eastern Europe, and describes the feasibility and implications of potential solutions to ensure lower pharmaceutical prices as compared to higher-income countries. European stakeholders, especially in Central-Eastern Europe and at the EU level, should understand the implications of increased transparency of pricing and should develop solutions to prevent the limited accessibility of new medicines in lower-income countries.