Pharmaceuticals, Prescription Plans, and Promoting Progress
| dc.contributor.author | Grinols, Earl L., 1951- | |
| dc.contributor.author | Henderson, James W. | |
| dc.date.accessioned | 2005-08-13T17:41:49Z | |
| dc.date.available | 2005-08-13T17:41:49Z | |
| dc.date.issued | 2005-08-13T17:41:49Z | |
| dc.description.abstract | Monopoly response to buyers who pay fraction c of the product cost is to raise the buyer price for the initial quantity q0 from p0 to 1/c p0, and adjust to a different price and quantity only if profits are thereby raised further. A 25% prescription drug plan co-payment provision, for example, magnifies the pharmaceutical patent holder’s profits more than a fourfold increase in price at the original output would do. This is detrimental to the adoption and use of prescription drug plans. In addition to the appearance of abusing a prescription drug program, the inducement to patentable pharmaceutical research and development (R&D) cannot be optimal both before and after such a plan’s institution. Possibly it is optimal in neither. This paper describes an efficient incentive plan for R&D that does not depend on monopoly and thus is not an impediment to co-pay provisions that might be part of a prescription drug plan. | en |
| dc.format.extent | 552720 bytes | |
| dc.format.mimetype | application/pdf | |
| dc.identifier.uri | http://hdl.handle.net/2104/322 | |
| dc.language.iso | en_US | en |
| dc.relation.ispartofseries | BaylorBusiness Economics: Working Papers Series | en |
| dc.relation.ispartofseries | 2004-057-ECO | en |
| dc.subject | Research and Development | en |
| dc.subject | Prescription Drug | en |
| dc.subject | Co-payment | en |
| dc.subject | Patent Protection | en |
| dc.subject | Intervention Principle | en |
| dc.title | Pharmaceuticals, Prescription Plans, and Promoting Progress | en |
| dc.type | Working Paper | en |