The impact of the reference price system on the pharmaceutical market: A theoretical approach

This article analyses the impact of the reference pricesystem on the price-setting strategies of thepharmaceutical firms and on the level of generic usage.This model is the first to take explicitly into accountthe impact of the reference price mechanism on the levelof competition between brand-name and generic drugs andnational pharmaceutical spending. We consider aduopolistic model with one firm producing the brand-namedrug, whose patent has already expired, and the otherproducing the corresponding generic version. We work ina partial equilibrium framework where firms set pricessequentially and consumers face heterogeneous switchingcosts.We show that brand producers compensate thedecline of profits by selling greater quantities insteadof charging higher prices, thus fostering pricecompetition in the pharmaceutical market. This result isa consequence of both the assumption of a verticallydifferentiated model and the introduction of thereference price system.

Reference prices: the spanish way

The aim of this paper is to analyse the effects of recent regulatory reforms that Spanish Health Authorities have implemented in the pharmaceutical market: the introduction of a reference price system together with the promotion of generic drugs. The main objectives of these two reforms are to increase price competition and, ultimately, reduce pharmaceutical costs. Before the introduction of reference prices, consumers had to pay a fixed copayment of the price of whatever drug purchased. With the introduction of such system, the situation differs in the following way: if (s)he buys the more expensive branded drug, then (s)he pays a sum of two elements: the copayment associated to the reference price plus the difference between the price of this good and the reference price. However, if the consumer decides to buy the generic alternative, with price lower than the reference price, then (s)he has to pay the same copayment as before. We show that the introduction of a reference price system together with the promotion of generic drugs increase price competition and lower pharmaceutical costs only if the reference price is set in a certain interval. Also profits for the duopolists might be reduced. These results are due to the opposing effects that reference prices have on branded and generic producers respectively.

Generic drugs in Spain: price competition vs. moral hazard

This paper examines competition between generic and brand-name drugs in the regulated Spanish pharmaceutical market. A nested logit demand model is specified for the three most consumed therapeutic subgroups in Spain: statins (anticholesterol), selective serotonin reuptake inhibitors (antidepressants) and proton pump inhibitors (antiulcers). The model is estimated with instrumental variables from a panel of monthly prescription data from 1999 to 2005. The dataset distinguishes between three different levels of patients’ copayments within the prescriptions and the results show that the greater the level of insurance that the patient has (and therefore the lower the patient’s copayment), the lower the proportion of generic prescriptions made by physicians. It seems that the low level of copayment has delayed the penetration of generics into the Spanish market. Additionally, the estimation of the demand model suggests that the substitution rules and promotional efforts associated with the reference pricing system have increased generic market share, and that being among the first generic entrants has an additional positive effect.

The impact of generic reference pricing interventions in the statin market

The objective of this study was to evaluate the intended and unintended impact on pharmaceutical use and sales of three public financing reforms applied to the prescription of statins: a Spanish generic reference pricing (RP) system for lovastatin and simvastatin, and two competing policies introduced by the Andalusian Public Health Service (APHS) for all statins, first a maximum consumer price (MCP) and then a so called quality prescribing incentive for general practitioners (MCP plus PI).This study is designed as an observational, retrospective, interrupted time series analysis with comparison series (APHS and the rest of Spain) of 46 monthly drug use and sales ratios from January 2001 to October 2004 for each active ingredient in the group of statins.RP has been effective at reducing the volume of sales growth of the off-patent statins, yet its overall impact on sales of all statins has been relatively modest. The quantity and volume of sales impact heavily depends on regulatory RP details such as when the system is introduced, how often it is updated, and how the reference price is calculated.

Incentives and pharmaceutical reimbursement reforms in Spain

The aim of this paper is to assess whether cost-containment has beenaffected by recent pharmaceutical reimbursement reforms that have beenintroduced in the Spanish health care system over the period 1996-2002,under the conservative Popular Party government. Four main reimbursementpolicies can be observed in the Spanish pharmaceutical market after1996, each of them largely unintegrated with the other three. First, asecond supplementary negative list of excluded pharmaceutical productswas introduced in 1998. Second, a reference pricing system wasintroduced in December 2000, with annual updating and enlargement.Third, the pharmacies payment system has moved from the traditionalset margin on the consumer price to a margin that varies according tothe consumer price of the product, the generic status of the product,and the volume of sales by pharmacies. And fourth, general agreementsbetween the government and the industry have been reached with costcontainment objectives. In the final section of this paper we presentan overall assessment of the impact of these pharmaceuticalreimbursement policies on the behaviour of the agents in thepharmaceutical market.

Let's talk: public evaluation of large projects: variational inequialities, bilevel programming and complementarity. a survey

Large projects evaluation rises well known difficulties because -by definition- they modify the current price system; their public evaluation presents additional difficulties because they modify too existing shadow prices without the project. This paper analyzes -first- the basic methodologies applied until late 80s., based on the integration of projects in optimization models or, alternatively, based on iterative procedures with information exchange between two organizational levels. New methodologies applied afterwards are based on variational inequalities, bilevel programming and linear or nonlinear complementarity. Their foundations and different applications related with project evaluation are explored. As a matter of fact, these new tools are closely related among them and can treat more complex cases involving -for example- the reaction of agents to policies or the existence of multiple agents in an environment characterized by common functions representing demands or constraints on polluting emissions.

The scrutiny of the principle of subsidiarity by autonomous regional parliaments with particular reference to the participation of the Parliament of Catalonia in the early warning system

The purpose of this article is to offer a practical approach to the new European dimension for regional parliaments signified by the entry into force of the Treaty of Lisbon. The parliamentary scrutiny of subsidiarity by way of the early warning system has assigned a new mission to legislative assemblies with the aim of reinforcing the intervention of regions in the drafting of policies by Union institutions. In the Spanish case, the institutionalisation of this mechanism came about with Act nº 24/2009, which attributes to the Joint Committee for the European Union, in the name of the Cortes Generales [the Spanish Parliament], the function of receiving the proposals for legislative acts by the EU and transferring them to the regional parliaments in order for the latter to issue, in a brief period of four weeks, a report on compliance with the principle of subsidiarity. The majority of regional parliaments have also carried out normative reforms to regulate the procedure of participation in the early warning system.

Economic impacts of alternative water policy scenarios in the Spanish production system: an input-output analysis

The objective of this paper is to analyse the economic impacts of alternative water policies implemented in the Spanish production system. The methodology uses two versions of the input-output price model: a competitive formulation and a mark-up formulation. The input-output framework evaluates the impact of water policy measures on production prices, consumption prices, intermediate water demand and private welfare. Our results show that a tax on the water used by sectors considerably reduces the intermediate water demand, and increases the production and consumption prices. On the other hand, according to Jevons' paradox, an improvement in technical efficiency, which leads to a reduction in the water requirements of all sectors and an increase in water production, increases the amount of water consumed. The combination of a tax on water and improved technical efficiency takes the pressure off prices and significantly reduces intermediate water demand. JEL Classification: C67 ; D57 ; Q25. Keywords: Production prices; Consumption prices; Water uses; Water policy; Water taxation.

Economic impact of alternative policy measures implemented on the energy activities of the Catalan production system: an input-output analysis

The aim of the paper is to analyse the economic impact of alternative policies implemented on the energy activities of the Catalan production system. Specifically, we analyse the effects of a tax on intermediate energy uses, a reduction in the final production of energy, and a reduction in intermediate energy uses. The methodology involves two versions of the input-output price model: a competitive price formulation and a mark-up price formulation. The input-output price framework will make it possible to evaluate how the alternative measures modify production prices, consumption prices, private welfare, and intermediate energy uses. The empirical application is for the Catalan economy and uses economic data for the year 2001.

Testing low-altitude infrared digital photography from a mini-UAV to retrieve information for biological conservation

Satellite remote sensing imagery is used for forestry, conservation and environmental applications, but insufficient spatial resolution, and, in particular, unavailability of images at the precise timing required for a given application, often prevent achieving a fully operational stage. Airborne remote sensing has the advantage of custom-tuned sensors, resolution and timing, but its price prevents using it as a routine technique for the mentioned fields. Some Unmanned Aerial Vehicles might provide a “third way” solution as low-cost techniques for acquiring remotely sensed information, under close control of the end-user, albeit at the expense of lower quality instrumentation and instability. This report evaluates a light remote sensing system based on a remotely-controlled mini-UAV (ATMOS-3) equipped with a color infra-red camera (VEGCAM-1) designed and operated by CATUAV. We conducted a testing mission over a Mediterranean landscape dominated by an evergreen woodland of Aleppo pine (Pinus halepensis) and (Holm) oak (Quercus ilex) in the Montseny National Park (Catalonia, NE Spain). We took advantage of state-of-the-art ortho-rectified digital aerial imagery (acquired by the Institut Cartogràfic de Catalunya over the area during the previous year) and used it as quality reference. In particular, we paid attention to: 1) Operationality of flight and image acquisition according to a previously defined plan; 2) Radiometric and geometric quality of the images; and 3) Operational use of the images in the context of applications. We conclude that the system has achieved an operational stage regarding flight activities, although with meteorological limits set by wind speed and turbulence. Appropriate landing areas can be sometimes limiting also, but the system is able to land on small and relatively rough terrains such as patches of grassland or short matorral, and we have operated the UAV as far as 7 km from the control unit. Radiometric quality is sufficient for interactive analysis, but probably insufficient for automated processing. A forthcoming camera is supposed to greatly improve radiometric quality and consistency. Conventional GPS positioning through time synchronization provides coarse orientation of the images, with no roll information.

Proving the performance of a new revenue management system

Revenue management (RM) is a complicated business process that can best be described ascontrol of sales (using prices, restrictions, or capacity), usually using software as a tool to aiddecisions. RM software can play a mere informative role, supplying analysts with formatted andsummarized data who use it to make control decisions (setting a price or allocating capacity fora price point), or, play a deeper role, automating the decisions process completely, at the otherextreme. The RM models and algorithms in the academic literature by and large concentrateon the latter, completely automated, level of functionality.A firm considering using a new RM model or RM system needs to evaluate its performance.Academic papers justify the performance of their models using simulations, where customerbooking requests are simulated according to some process and model, and the revenue perfor-mance of the algorithm compared to an alternate set of algorithms. Such simulations, whilean accepted part of the academic literature, and indeed providing research insight, often lackcredibility with management. Even methodologically, they are usually awed, as the simula-tions only test \within-model" performance, and say nothing as to the appropriateness of themodel in the first place. Even simulations that test against alternate models or competition arelimited by their inherent necessity on fixing some model as the universe for their testing. Theseproblems are exacerbated with RM models that attempt to model customer purchase behav-ior or competition, as the right models for competitive actions or customer purchases remainsomewhat of a mystery, or at least with no consensus on their validity.How then to validate a model? Putting it another way, we want to show that a particularmodel or algorithm is the cause of a certain improvement to the RM process compared to theexisting process. We take care to emphasize that we want to prove the said model as the causeof performance, and to compare against a (incumbent) process rather than against an alternatemodel.In this paper we describe a \live" testing experiment that we conducted at Iberia Airlineson a set of flights. A set of competing algorithms control a set of flights during adjacentweeks, and their behavior and results are observed over a relatively long period of time (9months). In parallel, a group of control flights were managed using the traditional mix of manualand algorithmic control (incumbent system). Such \sandbox" testing, while common at manylarge internet search and e-commerce companies is relatively rare in the revenue managementarea. Sandbox testing has an undisputable model of customer behavior but the experimentaldesign and analysis of results is less clear. In this paper we describe the philosophy behind theexperiment, the organizational challenges, the design and setup of the experiment, and outlinethe analysis of the results. This paper is a complement to a (more technical) related paper thatdescribes the econometrics and statistical analysis of the results.

Statistical reference criteria for adaptive signal processing in digital communications

A general criterion for the design of adaptive systemsin digital communications called the statistical reference criterionis proposed. The criterion is based on imposition of the probabilitydensity function of the signal of interest at the outputof the adaptive system, with its application to the scenario ofhighly powerful interferers being the main focus of this paper.The knowledge of the pdf of the wanted signal is used as adiscriminator between signals so that interferers with differingdistributions are rejected by the algorithm. Its performance isstudied over a range of scenarios. Equations for gradient-basedcoefficient updates are derived, and the relationship with otherexisting algorithms like the minimum variance and the Wienercriterion are examined.

Interoperability of learning objects copyright in the LUISA semantic learning management system

Semantic Web technology is able to provide the required computational semantics for interoperability of learning resources across different Learning Management Systems (LMS) and Learning Object Repositories (LOR). The EU research project LUISA (Learning Content Management System Using Innovative Semantic Web Services Architecture) addresses the development of a reference semantic architecture for the major challenges in the search, interchange and delivery of learning objects in a service-oriented context. One of the key issues, highlighted in this paper, is Digital Rights Management (DRM) interoperability. A Semantic Web approach to copyright management has been followed, which places a Copyright Ontology as the key component for interoperability among existing DRM systems and other licensing schemes like Creative Commons. Moreover, Semantic Web tools like reasoners, rule engines and semantic queries facilitate the implementation of an interoperable copyright management component in the LUISA architecture.