Access to Medicines and European Market Integration

Abstract

In this paper we document a process of price convergence in the European market for pharmaceuticals and relate it to access to innovative medicines in individual countries. The EU is a peculiar case study, where free circulation of goods exists, but pricing policies are designed and implemented by Member States. Thanks to a unique census database on product sales and launches for Â…fifteen EU countries, we detect a process of price convergence, both in nominal and in real terms. Therefore, we Â…nd that a faster rate of price convergence and a lower income per capita are associated with stronger delays in launches of new medicines. Moreover, country delays tend to be higher for innovative and Â…first in class chemical compounds. Our results suggest that inefficiencies arise from drugs regulation, when countries widely differ in income per capita, public Â…finance sustainability conditions, and regulatory frameworks. Policies of external reference pricing tend to exacerbate welfare losses. A policy of differential pricing is suggested, in order to take into account both therapeutic value and willingness to pay.