International price regulations in the pharmaceutical sector: A common model to sharing cost and benefits

In this paper, we analyse the market for drugs in health care markets where third payers (an insurance company or a government agency) bear the cost and we suggest a common and transparent methodology to set the price for new drugs as well as active principles for which an alternative already exists. We argue that in this context, a bargaining approach is the most suitable instrument to describe the price-setting procedure and we show how this approach can be implemented. We argue that many of the systems that are used by western countries are in fact simplified applications of our model, the main difference usually being that the actual price-setting procedure is not as transparent as the one we propose. Copyright © by The Haworth Press, Inc. All rights reserved.