European Prices Research Articles

Insight into recent reforms and initiatives in Austria: implications for key stakeholders

Pharmaceutical expenditure continued to rise steadily in Austria during the 1990s and early 2000s despite a variety of reforms. However, recent reforms and initiatives have moderated the growth rate. These initiatives include transparent pricing of new drugs and generics, greater restrictions on the prescribing of new drugs and voluntary price reductions. Alongside this, there have also been initiatives to enhance rational and efficient prescribing. The lack of published data makes it difficult to fully analyze the impact of individual reforms. In addition, some reforms have only recently been introduced. Despite this, implications can be drawn for key stakeholder groups in the future. This includes pharmaceutical companies continuing to need to demonstrate substantially added benefit for their new drug to command average European prices. Otherwise, premiums will be restricted to a maximum 10% above the price of current standards. In addition, companies will need to continue to lower the price of their brands in interchangeable classes as standards become available as generics. The alternative will be prescribing restrictions. Further reforms will be needed in Austria to meet government growth targets for pharmaceutical expenditure of only 3–4% per annum, while continuing to fund new innovative drugs and increased volumes with greater prevalence of chronic diseases. Possible future measures and their implications for key stakeholder groups will also be discussed.

How can we determine the expected prices for lambs? – Analysis of the Hungarian and Italian lamb prices

The Hungarian sheep sector has become a one-market sector, almost the whole amount of slaughter lamb went to Italy, which increased its defenselessness. In addition to the sole Italian market showing a permanent demand for Hungarian lambs, it would worth to exploit possibilities in other European markets considering the seasonal differences in Italian prices. Such markets can be the Spanish and Greek for ”light” and the French, German and English markets for ”heavy” lambs. Both the Italian and Hungarian prices have three major periods: Easter, Ferragusto and Christmas. Due to the changes in the prices, the producers often suffer great losses, therefore, the temporal adaptation of production, market research, technological and development activities need to be improved. It is important that the living of Hungarian sheep breeders should not be dependent solely upon the Italian market, distribution of products should be ensured in other markets too, so that the safety of sales be increased and higher prices and higher income could be achieved. The European lamb prices are characterized by large seasonal fluctuation and the degree and timing of changes are different in the different countries. Study of the literature and the results obtained in my study on lamb sales called for an analysis and study of the possibilities of price forecasting. In my study, I performed a forecasting of lamb prices in Hungary and Italy for the period between 1996 and 2006 based on the data of the European Committee. Among the forecasting methods, seasonal decomposition and SARIMA models are the most precise, producers can achieve a better market position by using these in the practice.

Exponential time integration for fast finite element solutions of some financial engineering problems

We consider exponential time integration schemes for fast numerical pricing of European, American, barrier and butterfly options when the stock price follows a dynamics described by a jump-diffusion process. The resulting pricing equation which is in the form of a partial integro-differential equation is approximated in space using finite elements. Our methods require the computation of a single matrix exponential and we demonstrate using a wide range of numerical tests that the combination of exponential integrators and finite element discretisations with quadratic basis functions leads to highly accurate algorithms for cases when the jump magnitude is Gaussian. Comparison with other time-stepping methods are also carried out to illustrate the effectiveness of our methods.

OK International announces European price reductions

OK International announces European price reductions

The sustainable residential water use: Sustainability, efficiency and social equity. The European experience

The present paper traces the operational conditions governing the sustainable use of water in cities. Towards this objective, the paper first proposes a new comprehensive definition for the sustainable use of water. Next, efficiency in use is proposed as a fundamental instrument in achieving sustainability, in spite of prevailing opinions maintaining that sustainability and efficiency aim at different and probably conflicting objectives. In this light, several pricing modes that inhibit efficiency are examined and their effects are defined. In this context, egalitarian pricing which, nevertheless, prevents efficiency, is also systematically evaluated until it is ascertained that it does not serve social equity in the use of water, in the long run. All the more, the present paper advocates that certain egalitarian pricing systems such as the increasing block rates – most prevalent at this time – may have the reverse effect than the one intended and hence, in the long run, impose negative impacts on the welfare of low incomes. As a result, full-cost prices are proposed as a necessary instrument for the sustainable use of water; an instrument that promotes social equity in the long run. The assumptions of the study are examined in a comparative analysis of representative European pricing systems and urban management modes.

Pharmaceutical pricing and reimbursement reforms in Greece

Pharmaceutical price regulation in Greece is centralized. The National Drug Organization (EOF) is the main regulatory authority functioning under the auspices of the Ministry of Health and Social Solidarity. In 2004, total pharmaceutical expenditure in Greece reached the level of 2.9 billion euro, of which 77.9% were public expenditure and the remaining 22.1% private. According to Organization for Economic Cooperation and Development (OECD) data the total per-capita expenditure on pharmaceutical care in Greece is among the lowest in Europe, representing 58% of the EU-12 average. In 1998, Greece introduced a reimbursement list, and the lowest reference pricing system among the 15 European Union member states with the purpose of controlling the growth of pharmaceutical expenditure. The measures proved to be ineffective since pharmaceutical expenditure, after a short-term reduction, continued to increase at similar rates to those before the introduction of price control mechanisms. The average annual increase of pharmaceutical expenditure in Greece over the period 1998-2003 was 7.9%, which is among the highest in the OECD countries (average 6.1%). New pharmaceutical legislation, no. 3457, was enacted on May 8th 2006, aiming at greater access to medicines, improvements to citizens' quality of life, effective and efficient utilization of health resources, transparency in public management, protecting public health, and maintaining long-term financial viability of the insurance system. The innovative aspect of the new legislation is the abolition of the positive list and the establishment of a rebate system granting the National Insurance Funds a rebate rate paid by the pharmaceutical companies. The purpose of this paper is twofold. First to assess the effectiveness of the positive list introduced in 1988 in Greece, using simple econometric models. Second to present the recent pharmaceutical reforms aimed at the introduction of a rebate system and establishing reimbursement pricing based on the average of the three lowest European prices.

What is the Future for EU-Africa Agricultural Trade After CAP Reform?

The EU's common agricultural policy seriously distorted not only EU commodity markets but also many world markets, through the subsidised export of large volumes of commodities – produced at double (or even treble) – the economic cost. This is not contested. Amongst those affected wereAfrican farmers who suffered from the depression of world market prices for commodities that they could produce cheaply, such as maize, sugar and beef. With CAP reform, which should soon see all EU-produced commodities trading on the world market without the need for export subsidies, Europe argues that it is now no longer distorting world markets, and so no longer harming African producers. This paper demonstrates how untrue this is. On the one hand, because Europe continues to produce the commodities in question at the same or higher volume (thanks to income support for farmers), the impact on the world market is unchanged. On the other hand, concessions to ACP countries designed to help them under the old regime (such as the ‘protocols’ which enabled them to earn the inflated European prices for quotas of beef and sugar) are disappearing, and preferences over third countries are eroding as tariffs fall. Other elements of policy related to CAP reform, such as the increasingly strict EU food safety standards, and the raised competitiveness of EU processed foods as the price of European inputs falls (a disguised subsidy), are discussed. The paper concludes with some concrete examples of the impact of this on the South African confectionery industry.

Efficient solutions for discrete Asian options

While in the literature most studies on pricing focus on continuous Asian options, in this paper we provide efficient solutions for both European and American discrete average price Asian options. The method used for deriving the approximation formula for European Asian options is based on the idea of Bouaziz et al. (J Bank Finance 18:823–839, 1994) and Taso et al. (J Futures Mark 23:487–516, 2003) in which the Taylor expansion is used to obtain the approximation formula for continuous average strike Asian options. By using the Taylor expansion to the second order, a simple and accurate solution can be obtained. The approximation formula for the European Asian option can further be used to enhance the efficiency of the pricing of the American Asian options when using the numerical method.

Argentina (with a comment on European prices)

Argentina (with a comment on European prices)

A Scandinavian chemical wood pulp mill. Part 1. Energy audit aiming at efficiency measures

A Swedish wood-pulp mill is surveyed in terms of energy supply and use in order to determine the energy-saving potential. Conservation measures are of increasing interest to Swedish industry, as energy prices have continued to rise in recent years. The electricity price particularly increased after the deregulation of the Scandinavian electricity market in 1996. The deregulation expanded to all of the EU in July 2004, which may increase the Swedish electricity price further until it reaches the generally higher European price level. Furthermore, oil prices have increased and the emissions trading scheme for CO 2 adds to the incentive to reduce oil consumption. The energy system at the surveyed pulp mill is described in terms of electricity and process heat production and use. The total energy-saving potential is estimated and some saving points are identified. The heat that today is wasted at the mill has been surveyed in order to find potential for heat integration or heat export. The result shows that the mill probably could become self-sufficient in electricity. Particularly important in that endeavour is updating old pumps.

Revisiting the Money Demand Function in the Euro Area (in French)

recent years, the dynamics of M3 in the euro area have been driven by two factors: a strong preference for liquidity, observed between 2001 and 2003, followed by a normalisation, at a relatively moderate pace, of portfolio behaviour; as regards the counterparts, changes in M3 and net external assets were of comparable magnitude. These factors highlight the role of national and international portfolio shifts in monetary developments. Furthermore, the traditional specifications of the money demand function sometimes yield unsatisfactory results: instability of short and long-term coefficients, relatively large differences between the estimated and actual value of monetary aggregates, and significant changes in the number of long-run relations. Hence the idea of constructing a money demand function that excludes the external counterpart of M3 or, alternatively, introducing financial asset prices in the demand function of M3, as suggested by Friedman (1988). First, the basic equation, based on the quantitative equation of money, was reestimated in order to verify, for example, whether extending the estimation period or revising certain variables would not result in a major change, notably in terms of the stability of the parameters or the number of structural relations. Indeed, this equation exhibits two instabilities (parameters and the number of long-run relations). Similar results are obtained when the external counterpart of M3 is not taken into account. However, by including European share prices, we obtain a substitution effect (significantly negative coefficient) of this variable and a better adjustment, without affecting the two long-run relations (money demand and the Fisher relation) discussed in the article published in Banque de France Monthly Digest No. 113. So, all other things being equal, a decline in European stock market yields would result in a rise in real money holdings and a decrease in the velocity of circulation of money. Equity market developments therefore appear to be a significant explanatory factor for the dynamics of M3 in the euro area. Lastly, estimates of the real money gap, based on the money demand equation factoring in the substitution effect associated with European stock price developments, point to moderate but persistent excess liquidity in the euro area.

Resource-effective systems achieved through changes in energy supply and industrial use: The Volvo–Skövde case

The result presented in this paper shows that the Volvo plant can decrease its electricity use by 44% by making the use of electricity more efficient and converting from oil and electricity to district heating for hot tap-water, space heating and cooling. The increased demand of district heating makes investing in a new planned CHP and cooperation between the Volvo plant and the local energy utility production cost fall by 46% at current unit electricity price and by 64% when calculating with a European unit electricity price and investment in an optimised CHP system instead of the planned plant. The study furthermore shows that the global emissions of the greenhouse gas carbon-dioxide will be reduced by 350% a year if the two energy-supply measures are taken and the electricity unit prices are at a European level.

INVITED COMMENTARY: Phosphodiesterase 5 Inhibitors and Nonarteritic Anterior Ischemic Optic Neuropathy (NAION): Coincidence or Causality?

Cancer drugs are a major component of pharmaceutical spending in the USA and Europe. The number of approved cancer drugs continues to increase. More new drugs with overlapping mechanisms of action and similar approved indications might be expected to decrease prices within drug classes. We compared patterns of price changes for cancer drugs within the same class in the USA and in two European countries (Germany and Switzerland) with national mechanisms for drug price negotiation.For this comparative analysis, we identified cancer drugs approved for the treatment of solid cancers in the USA and Europe (Germany and Switzerland) between Jan 1, 2009, and Dec 31, 2020, using the US Food and Drug Administration's [email protected] database and the European Medicines Agency's publicly available database. We considered cancer drugs as within-class competitors if they were approved for the same indication and had the same biological mechanism. We calculated monthly treatment prices for each drug, median price changes at launch and over time, and differences within and across drug classes. European price data were converted to US dollars by applying the exchange rates on Dec 1, 2020, and prices were adjusted for inflation. Median changes in the drugs' monthly treatment prices at 2 and 4 years after market entry across and within drug classes were also assessed. For the USA, correlations in relative price changes between all pairs of drugs within and across drug classes were calculated with Spearman's rank correlation.Our study cohort comprised 12 drug classes covering nine indications. With the exception of one drug, increasing prices were observed within and across all drug classes in the USA (median 6·07% [range −3·60 to 33·83] 2 years after market entry, and 15·31% [–4·15 to 54·64] 4 years after market entry). By contrast, in Europe, prices generally decreased over time or did not increase more than inflation (2 years after market entry: −21·01% [range −50·72 to 12·71] in Germany and −1·48% [–26·81 to 1·69] in Switzerland; 4 years after market entry: −25·54% [–51·81 to 11·63] in Germany and −13·02% [–43·83 to 18·31] in Switzerland). In the USA, most prices changes within and across drug classes occurred at the end and beginning of the year (ie, from Dec 1 to Jan 31). In the USA, correlation for price changes was r=0·29 (SD 0·36) for within-class drugs and r=0·28 (0·36) for drugs across drug classes.Competition within classes of cancer drugs generally did not constrain rising prices in the USA. Price negotiations, as practised in Germany or Switzerland, could help address the high prices of cancer drugs in the USA.Swiss Cancer Research Foundation (Krebsforschung Schweiz), Swiss National Science Foundation, and Arnold Ventures.

Overreaction and Trading Strategies in European iShares

This article examines the forecasting power of German, U.K. and French iShares for the next day returns of the underlying Morgan Stanley country equity indexes and assesses whether European iShares overreact to developments after the close of European trading. The findings indicate that although deviations of European iShare prices from net asset values (NAVs) at the close of U.S. trading have significant forecast power for next day NAV returns, they overpredict. Deviations of closing iShare prices from their NAVs also lead to next day iShare price reversals that average roughly 3/8 of the size of the deviations. Finally, the article demonstrates the profitability of trading rules that exploit the tendency of European iShares to overreact to late day U.S. trading activity.

Liquidity Risk Premia in Corporate Bond Markets

This paper explores the role of liquidity risk in the pricing of corporate bonds. We show that corporate bond returns have signifcant exposures to fluctuations in treasury bond liquidity and equity market liquidity. Further, this liquidity risk is a priced factor for the expected returns on corporate bonds, and the associated liquidity risk premia help to explain the credit spread puzzle. In terms of expected returns, the total estimated liquidity risk premium is around 0.6% per annum for US long-maturity investment grade bonds. For speculative grade bonds, which have higher exposures to the liquidity factors, the liquidity risk premium is around 1.5% per annum. We find very similar evidence for the liquidity risk exposure of corporate bonds for a sample of European corporate bond prices.

European Transfer Pricing Trends at the Crossroads: Caught between Globalization, Tax Competition, and EC Law

European Transfer Pricing Trends at the Crossroads: Caught between Globalization, Tax Competition, and EC Law

European prices of newly launched reimbursable pharmaceuticals – a pilot study

High prices of new pharmaceuticals play an important part in rapidly rising pharmaceutical costs. Many countries try to curb these rising costs through control of the price of reimbursable medicines. There is, however, little internationally comparable information on prices. This study aimed to examine the prices of new, reimbursable pharmaceuticals in the EU member states. Price data were collected from eight products authorised by the EC in 2000. The prices of these products varied considerably. Wholesale prices were highest in those countries where manufacturers are free to set the prices of their products. Pharmacy margins and taxes, however, change the ranking of the most expensive or the cheapest countries.

Estimating Firm-Level Demand at a Price Comparison Site: Accounting for Shoppers and the Number of Competitors

Clearinghouse models of online pricing - such as Varian (1980), Rosenthal (1980), Narasimhan (1988), and Baye-Morgan (2001) - view a price comparison site as an clearing-house where and loyals obtain price and product information to make online purchases. These models predict that the responsiveness of a firm's demand to a change in its price depends on the number of sellers and whether the price change results in the firm charging the lowest price in the market. Using a unique firm-level dataset from Kelkoo.com (Yahoo!'s European price comparison site), we examine these predictions by providing estimates of the demand for PDAs. Our results indicate that the number of competing sellers and both the firm's location on the screen and relative ranking in the list of prices are important determinants of an online retailer's demand. We find that an online monopolist faces an elasticity of demand of about -2, while sellers competing against 10 other sellers face an elasticity of about -6. We also find empirical evidence of a discontinuous jump in a firm's demand as its price declines from the second-lowest to the lowest price. Our estimates suggest that about 13% of the consumers at Kelkoo are shoppers who purchase from the seller offering the lowest price.

Pricing of American style options with an adjoint process correction method

Pricing of American options is a more complicated problem than pricing of European options. In this work a formula is derived that allows the computation of the early exercise premium, i.e. the price difference between these two option types in terms of an adjoint process evolving in the reversed time direction of the original process determining the evolution of the European price. We show how this equation can be utilised to improve option price estimates from numerical schemes like finite difference or Monte Carlo methods.

The high cost of medicines in Ireland. Is it time to change the pricing mechanism?

This study compared the prices of prescription medicines in Ireland to those in other countries to determine potential cost savings on the largest community drug scheme if an alternative pricing mechanism were adopted. The analysis covered a sample of 39 drugs (44.8% of the total ingredient cost) selected from the top 70 drugs in order of total ingredient cost. Potential cost savings ranged from Euro 20.73 million if a Danish price were adopted, to Euro 16.23 million for the average European price, to Euro 6.82 million for the UK price. The estimated savings were statistically significant for the Danish and average European price but not for the UK price. This study demonstrates the high ex-wholesale price of prescription medications in Ireland.