Naslov
Personalized Medicine and Personalized Pricing: Degrees of Price Discrimination

Autori
Mance, Davor ; Mance, Diana ; Vitezić, Dinko

Vrsta, podvrsta i kategorija rada
Poglavlja u knjigama, znanstveni

Knjiga
Personalized Medicine in Healthcare Systems Legal, Medical and Economic Implications

Urednik/ci
Bodiroga-Vukobrat, Nada ; Rukavina, Daniel ; Pavelić, Krešimir ; Sander, Gerald G.

Izdavač
Springer

Grad
Cham

Godina
2019

Raspon stranica
171-180

ISBN
978-3-030-16464-5

ISSN
2366-0953

Ključne riječi
personalized medicine, personalized pricing, price discrimination

Sažetak
Economics developed a set of three degrees of price discrimination dependent on whether the seller targets individuals or groups, and whether buyers wish to use quantity rebates. The seller’s reason to price discriminate is to capture as much of the buyers utility surplus. Price discrimination is deemed unfair and immoral, and this is especially so in the market for pharmaceutical therapies. However, sometimes it can indeed be socially useful to price discriminate as the practice, under circumstances, enhances efficiency and social welfare. The market for pharmaceuticals is a non-typical market as irreversible costs of research and development form the brunt of the cost structure. As pharmaceutical companies are driven by profit and bounded by patent expiration dates, discriminatory pricing schemes are necessary to recover investment costs of research and development as quickly as possible. The first degree of price discrimination consists of perfect, individually targeted, price/quality combinations that fully extract consumers’ surplus. The second-degree price discrimination consists of quantity rebates. The third degree of price discrimination is based on group targeting according to the group average willingness to pay. We introduce a fourth degree of price discrimination based on qualitative features of pharmaceuticals on a market for antiviral drugs. We use the SVR as an example of quality differentials causing market price differentials. The fourth type of discrimination would be of particular interest to the pharmaceutical industry and health management organisations as it introduces non-linear price- quality combinations.

Izvorni jezik
Engleski

Znanstvena područja
Interdisciplinarne prirodne znanosti, Temeljne medicinske znanosti, Ekonomija

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