European Prices Research Articles

Gas Versus Oil Prices: The Impact of Shale Gas

What significance will developments in shale gas production have for European gas prices? Some commentators paint a gloomy picture of the future gas markets. But most forecasts for the oil market are positive. Consequently, a view appears to prevail that price trends will differ sharply between oil and gas markets. This article looks at developments in US shale gas production and discusses their impact on the movement of European gas prices. The relationship between oil and gas prices over time is also analysed.

Common information asymmetry factors in syndicated loan structures

This paper provides a comprehensive study of the syndicate structure and its relationship to information asymmetry and loan spread by using principal component analysis on a large set of 40 structure-related variables. A total of six structure components are identified and related to syndicate quality, syndicate members’ heterogeneity or share concentration, lead arranger’s characteristics, lead lender’s or syndicate’s location, lender–borrower relationships, and lead institution type. In multivariate settings, all six components are significant determinants of loan spread, either directly or indirectly through their impact on other components. Lead share retention, previous lender–borrower relationships and syndicate quality are shown to be bilaterally related to loan spread. Structure components differ regionally, which can provide an explanation for the European pricing discount observed in the literature. An Asian discount is observed and cannot be explained by structure differences.

A new form of energy poverty is the hallmark of liberalised electricity sectors

The restructuring of electricity sectors has resulted in households paying significantly higher prices. Some European prices rose by more than 100 per cent between 2000 and 2010. NSW households experienced an 80 per cent increase during the period 2007 to 2012. Growing numbers of low‐income and vulnerable households are spending higher proportions of disposable income on energy bills and, we contend, suffer deprivation and social exclusion as a result. This phenomenon, we posit, is a new form of energy poverty driven by rapidly rising electricity prices which are directly related to electricity sector restructuring. The energy‐impoverished population is estimated at 150 million in Europe, and growing. Policy responses are ineffective and poorly targeted, while Australian policy makers rely on measures which significantly understate electricity price changes. This article explores the prevalence and consequences of the problem of energy poverty and outlines the extent of its occurrence in Australia, the country hailed as an exemplar of electricity sector liberalisation.

European CMBS Pricing:Bond, Mortgage, and Real Estate Characteristics

European CMBS Pricing:<i>Bond, Mortgage, and Real Estate Characteristics</i>

Current european regulatory perspectives on insulin analogues

Insulin analogues are increasingly considered as an alternative to human insulin in the therapy of diabetes mellitus. Insulin analogues (IAs) are chemically different from human insulin and may have different pharmacokinetic or pharmacodynamic properties. The significance of the modifications of the insulin molecule for the safety profile of IAs must be considered. This review describes the regulatory procedure and the expectations for the scientific content of European marketing authorization applications for innovative IAs submitted to the European Medicines Agency. Particular consideration is given to a potential cancer hazard. Specific regulatory guidance on how to address a possible carcinogenic or tumor promoting effect of innovative IAs in non-clinical studies is available. After marketing authorization, the factual access of patients to the new product will be determined to great extent by health technology assessment bodies, reimbursement decisions and the price. Whereas the marketing authorization is a European decision, pricing and reimbursement are national or regional responsibilities. The assessment of benefit and risk by the European Medicines Agency is expected to influence future decisions on price and reimbursement on a national or regional level. Collaborations between regulatory agencies and health technology assessment bodies have been initiated on European and national level to facilitate the use of the European Medicines Agency's benefit risk assessment as basis on which to build the subsequent health technology assessment. The option for combined or joint scientific advice procedures with regulators and health technology assessment bodies on European level or on a national level in several European Member States may help applicants to optimize their development program and dossier preparation in regard of both European marketing authorization application and reimbursement decisions.

European drug pricing and reimbursement to be discussed

European drug pricing and reimbursement to be discussed

Extracting Risk-Neutral Density and Its Moments from American Option Prices

Implied volatility is obtained from an option’s observed market price by solving backward through the pricing model to find the volatility that would produce the same value from the model. Unfortunately, this typically leads to the familiar volatility smile: different implied volatilities from different options on the same underlying. But from market prices for the full set of a given stock’s options, one can extract not just volatility, but the entire risk-neutral probability distribution, from which volatility and any other moment can easily be obtained, and the result does not depend on any particular pricing model. One problem, however, is that because the risk-neutral density is over the stock price at expiration day, the options involved need to be European so that exercise can only take place on that date. But exchange-traded options are nearly all American, in the U.S. at least. In this article, Tian shows how to obtain the risk-neutral density from American option prices. The trick is to build an implied lattice model from the American options then use it to find European option prices that would be consistent with the observed American prices in the market. The density can then be extracted from these implied European prices in the standard way. <b>TOPICS:</b>Options, VAR and use of alternative risk measures of trading risk, accounting and ratio analysis

Impacts of New EU and Czech Environmental Legislation on Heat and Electricity Prices of Combined Heat and Power Sources in the Czech Republic

In my economic model I calculate the impact of the new EU ETS Directive, the Industrial Emissions Directive and the new air protection law on future heat and electricity prices for combined heat and power sources. I discover that there will be a significant increase in heat and electricity prices, especially because of the implementation of new so-called benchmark tools for allocating allowances. The main problem of large heat producers in this respect is loss of competitiveness on the heat market due to emerging stricter environmental legislation, which is not applied to competitors on the heat market (smaller heat sources). There is also lack of clarity about the modalities for allocating free allowances, and about the future development of the whole carbon market (the future European allowance price).

Growth with Moderation and Uncertainty

With heightened uncertainties and moderating global and Western European growth and oil prices, and volatile capital flows, Russia is likely to grow by 4.2 percent in 2010, followed by 4.5 percent in 2011 and 3.5 percent in 2012 as domestic demand expands in line with gradual improvements in the labor and credit markets. Unemployment situation is likely to get worse before it gets better later in 2011. Fiscal risks have risen with likely expenditure pressures and downside risks to oil. While there is huge diversity across regions in the patterns of labor market recovery, smaller regions with a larger share of SMEs, better investment climate, more FDI, and stronger financial sector presence tend to show a more robust recovery.

European wood pellet market integration – A study of the residential sector

The integration of European energy markets is a key goal of EU energy policy, and has also been the focal point of many scientific studies in recent years. International markets for coal, oil, natural gas and electricity have previously been investigated in order to determine the extent of the respective markets. This study enhances this field of research to bioenergy markets. Price series data and time series econometrics are used to determine whether residential sector wood pellet markets of Austria, Germany and Sweden are integrated. The results of the econometric tests show that the German and Austrian markets can be considered to be integrated, whereas the Swedish market is separate from the other two countries. Although increased internationalization of wood pellet markets is likely to contribute to European price convergence and market integration, this process is far from completed.

Analysing convergence in Europe using the non-linear single factor model

We investigate convergence in European price level, unit labour cost, income and productivity data over the period of 1960–2006 using the non-linear time-varying coefficients factor model proposed by Philips and Sul (2007 Econometrica 75:1771–1855). This approach is extremely flexible in order to model a large number of transition paths to convergence. We find regional clusters in consumer price level data. GDP deflator data and unit labor cost data are far less clustered than CPI data. Income per capita data indicate the existence of three convergence clubs without strong regional linkages; Italy and Germany are not converging to any of those clubs. Total factor productivity data indicate the existence of a small club including fast-growing countries and a club consisting of all other countries.

Sustainability implications of railway infrastructure charging and cost allocation: the case of Bulgaria

The necessity of market-based decisions is a key factor for the development of the railway transport. The main aim of this paper is to study the infrastructure charging regime and cost allocation methodology, currently, in use in Bulgaria in order to reveal the level of implementation of the European transport pricing policy in the country. The analysis of adopted cost allocation approaches as well as the current market signals and their influence on the railways performance permits to outline the opportunities for implementation of new progressive pricing principles which could facilitate the move towards sustainable transport.

Ongoing pharmaceutical reforms in France

The rapid rise in pharmaceutical costs in France has been driven by new technologies and the growing prevalence of chronic diseases as well as considerable prescribing freedom and choice of physician among patients. This has led to the introduction of a number of reforms and initiatives in an attempt to moderate expenditure whilst ensuring universal coverage and rewarding innovation. These reforms include accelerating access to and granting average European prices for new innovative drugs, delisting drugs where there are concerns over their value and instigating rebates for excessive prescribing. Alongside this, ongoing initiatives to improve the quality and efficiency of prescribing include programmes to enhance generic prescribing and dispensing as well as to reduce antibacterial and anxiolytic/hypnotic prescribing. However, there have been few publications documenting the impact of specific reforms on the overall costs and quality of care, which have been exacerbated by compartmentalization of budgets. Estimates suggest savings of over €27 million/year by decreasing antibacterial prescribing, €450 million/year by not reimbursing ineffective drugs, €670 million/year from pharmaceutical company rebates and approximately €1 billion/year from increased prescribing and dispensing of generics (year 2003–7 values). Additional savings of at least €1.5 billion/year are seen as being possible from increased use of generics such as generic proton pump inhibitors, statins (HMG-CoA reductase inhibitors) and ACE inhibitors instead of current branded products such as angiotensin II type 1 receptor antagonists (angiotensin receptor blockers [ARBs]). Delisting drugs when there are concerns about their value provides an example to other countries with currently limited demand-side measures. Other possible examples include price : volume agreements and multifaceted campaigns to enhance generic prescribing and dispensing and reduce antibacterial prescribing. Possible future initiatives could include adopting more stringent criteria for categorizing new drugs as innovative as well as further reductions in the prices of generics. Other initiatives could include further enhancement of the quality and efficiency of prescribing, including formal auditing of physician prescribing, as well as increasing efforts to monitor the risk : benefit ratio of new drugs post-launch in real-world practice.

Projected economic impact of clinical findings of generic entry of topiramate on G4 European countries

ABSTRACTObjectives: To explore the effects of generic substitution of the antiepileptic drug (AED) topiramate (Topamax in Canada; to convert observed Canadian costs into the settings of France, Germany, Italy, and the United Kingdom (UK); and to forecast the economic impact of generic topiramate entry in these four European countries.† Topamax is a registered trade name of Ortho-McNeil Neurologics, Inc., Titusville, NJ, USAResearch design and methods: Health claims from Régie de l'assurance maladie du Québec (RAMQ) plan (1/2006–9/2008) and IMS Health data (1998–2008) were used. Patients with epilepsy and ≥2 topiramate dispensings were selected. An open-cohort design was used to classify observation into mutually-exclusive periods of branded versus generic use of topiramate. Canadian healthcare utilization and costs (2007 CAN$/person-year) were compared between periods using multivariate models. Annualized per-patient costs (2007€ or 2007£/person-year) were converted using Canadian utilization rates, European prices and service-use ratios. Non-parametric bootstrap served to assess statistical significance of cost differences. Topiramate market was forecasted following generic entry (09/2009–09/2010) using autoregressive models based on the European experience. The economic impact of generic topiramate entry was estimated for each country.Results: A total of 1164 patients (mean age: 39.8 years, 61.7% female) were observed for 2.6 years on average. After covariates adjustment, generic-use periods were associated with increased pharmacy dispensings (other AEDs: +0.95/person-year, non-AEDs: +12.28/person-year, p < 0.001), hospitalizations ( + 0.08/person-year, p = 0.015), and lengths of hospital stays (+0.51 days/person-year, p < 0.001). Adjusted costs, excluding topiramate, were CAN$1060/person-year higher during generic use (p = 0.005). Converted per-patient costs excluding topiramate were significantly higher for generic relative to brand periods in all European countries (adjusted cost differences per person-year: €706–815, p < 0.001 for all comparisons). System-wide costs would increase from 3.5 to 24.4% one year after generic entry.Limitations: Study limitations include the absence of indirect costs, possible claim inaccuracies, and IMS data limitations.Conclusions: Higher health costs were projected for G4 European countries from the Canadian experience following the generic entry of topiramate.

Some transfer pricing aspects of cross-border banking activities

The article explains the state of affairs regarding transfer pricing in the financial sector within Europe. More particularly, it focuses on some relevant trends which are of particular importance for banks in Europe. After briefly explaining the so-called ‘arm’s length principle’, the article focuses on transfer pricing documentation rules. Because various member states have recently implemented different documentation rules, the European Commission has adopted the European Union Transfer Pricing Documentation concept, in order to streamline the differing requirements. This European Union concept is explained in the article. Furthermore, this article discussed the OECD Transfer Pricing Guidelines and other OECD publications covering the transfer pricing aspects of the attribution of profits to permanent establishments and the business restructuring. In the conclusion, the authors give their view on some trends that can be discerned from these documents.

A Short History of Price Level Convergence in Europe

We study the evolution of price level dispersion in Europe by combining time‐series information on harmonized indices of consumer prices (HICPs) with occasional observations of absolute price levels. We find that European price levels converged over much of the last 40 to 50 years. In the United States, our benchmark, price level dispersion is more or less stable. A back‐of‐the‐envelope calculation suggests that indirect tax rate harmonization, convergence of nontraded input costs, and convergence of traded input costs (in the form of exchange rate stability and increased openness) are all important in explaining European price level convergence.

European pharmaceutical pricing and reimbursement conference

The 14th Annual European Pharmaceutical Pricing and Reimbursement Conference was sponsored by SMi Group Limited, London, UK. The participants included industry, government and private professionals involved in pricing and reimbursement. The purpose, each year, is to share advances in the discipline with respect to policies and theory.

Mass and energy-capital conservation equations to study price evolution of non-renewable energy resources, Part III – Energy supply curve

The price evolution of non-renewable resources versus the consumption rate is investigated with the aim of constructing the energy supply curve. The case studied is without accumulation nor depletion of the resources and the mass and energy-capital conservation equations are solved under the condition of the same mass flow rate of extraction and sale. The energy supply curve of extracted resource is dependent on the newly defined parameter, RINE, Rate of Interest of Non-extracted resources on the Extraction rate. The energy supply curve of sold resource is dependent on the newly defined parameter, RISE, Rate of Interest of Sold resources on the Extraction rate, in case the rate of interest of non-extracted resources, r N , is nil. In general, the energy supply curve of sold resource is dependent also on two dimensionless parameters, Dimensionless Critical Initial Price of Sold resources , i.e. DCIPS, and Dimensionless Critical Initial Price Extreme of Sold resources, i.e. DCIPES. The energy supply curve of sold resources is investigated under different relations between three parameters, i.e. extraction rate and interest rates of non-extracted and extracted/sold resources. New trends are observed in the economic market of non-renewable energy resources. The energy supply curve of the difference between sold and extracted resource is also obtained and is dependent on two dimensionless parameters, Critical Initial Price Difference , i.e. CIPD, and Critical Extreme of the Initial Price Difference, i.e. CEIPD. Finally, the predictions obtained with the present approach are compared to the real evolution of the world price of oil and the European price of gas versus the world consumption during the last three decades, i.e. from 1980 until 2005 for oil and from 1984 until 2005 for gas, taking into account inflation, discount and prime rates of the economic market. The agreement is acceptable but, more important, the trend is correctly predicted. The price difference between sold and extracted resources is also investigated versus the dimensionless mass flow rate of extraction. The evolution is dependent on four parameters: RINE, RISE, DCIPS, and DCIPES.

EU spot prices and industry structure: assessing electricity market integration

PurposeThe aim of this paper is to assess the state of spot price convergence between several European electricity day‐ahead markets.Design/methodology/approachThe concept of a fully integrated market is developed through the arbitrage relationship in which spot prices at one location should equal spot prices at another location plus the price of transmission. Accordingly, neighbouring markets are analysed to measure the relevance or their respective interconnecting and transmission constraints. Exploratory data approach is used and results are discussed, namely by correlation analysis.FindingsThis paper empirically shows that price differences have decreased during the analysed period, suggesting that integration between markets might be rising. The correlation analysis indicates very few relationships between these continental European power exchanges, what makes us to anticipate continuing difficulties in the building of a single electricity market. Nevertheless, there is some evidence for local integration and some price convergence. Only France and Germany appear to be relatively integrated with higher correlation coefficients, compared to the other cases. In respect to the other markets, this correlation analysis demonstrates that price variations in several locations do not affect prices in the neighbouring locations. Spain appears to be poorly integrated with the other locations as might be expected by its peripheral position and limited cross‐border transmission capacity.Originality/valueThe paper assesses electricity market integration in the context of European Union spot prices and industry structure.

Costs and effects of paliperidone extended release compared with alternative oral antipsychotic agents in patients with schizophrenia in Greece: a cost effectiveness study.

BackgroundTo compare the costs and effects of paliperidone extended release (ER), a new pharmaceutical treatment for the management of schizophrenia, with the most frequently prescribed oral treatments in Greece (namely risperidone, olanzapine, quetiapine, aripiprazole and ziprasidone) over a 1-year time period.MethodsA decision tree was developed and tailored to the specific circumstances of the Greek healthcare system. Therapeutic effectiveness was defined as the annual number of stable days and the clinical data was collected from international clinical trials and published sources. The study population was patients who suffer from schizophrenia with acute exacerbation. During a consensus panel of 10 psychiatrists and 6 health economists, data were collected on the clinical practice and medical resource utilisation. Unit costs were derived from public sources and official reimbursement tariffs. For the comparators official retail prices were used. Since a price had not yet been granted for paliperidone ER at the time of the study, the conservative assumption of including the average of the highest targeted European prices was used, overestimating the price of paliperidone ER in Greece. The study was conducted from the perspective of the National Healthcare System.ResultsThe data indicate that paliperidone ER might offer an increased number of stable days (272.5 compared to 272.2 for olanzapine, 265.5 f risperidone, 260.7 for quetiapine, 260.5 for ziprasidone and 258.6 for aripiprazole) with a lower cost compared to the other therapies examined (€7,030 compared to €7,034 for olanzapine, €7,082 for risperidone, €8,321 for quetiapine, €7,713 for ziprasidone and €7,807 for aripiprazole). During the sensitivity analysis, a ± 10% change in the duration and frequency of relapses and the economic parameters did not lead to significant changes in the results.ConclusionTreatment with paliperidone ER can lead to lower total cost and higher number of stable days in most of the cases examined.