(Fortune, 2002, p. 16).

Competition Barriers to Entry Regulation

Human Health =Variable of Health (Medical Care +

Medications)

Costs associated with Research and Discovery Manufacturing Marketing

Degrees of Pricing1. Charging consumers the maximum priceExample: Providing a new drug that individuals desire like an

AIDS medication at an unreasonable rate.

2. Charging different price depending on the quantity consumedExample: Wal-Mart purchasing a large quantity of drug X and passing on the savings to consumers compared to the local pharmacy purchasing small quantities and not receiving a savings.

3. Charging different prices for different groups of peopleExample: Markets, or groups of buyers with a more inelastic demand will pay higher prices.

Copayments Generic Substitutes Drug Formularies

• Ask doctors for 90 day supply instead of 30 days• If low income- see if hospitals and pharmacies will waive co-

pays• Charity care• Pharmacy assistance programs• Extra help Program

Provide Pharmacies incentives for dispensing generic drugs Have insurances mail coupons to consumers to waive their

co-payment if they opt for generic instead of brand name Have physicians distribute samples of generic drug samples Vouchers for free prescriptions to try generic products

Formulary Committees developing a list of approved drugs for:

Clinical Effectiveness Safety Cost

Medicine Equity and Drug Safety Act Medicare Prescription Drug Improvement and Modernization

Act Reimportation Splitting pills Generic substitutes

Enforce already existing legislation

Enact new legislation

Price Regulation

Structure and Regulation Drug Prices Monopoly Price Discrimination Cost Containment Drug Formularies Solutions and Implementation

DiMasi, J., Hansen, R., & Grabowski, H. (2003). The price of innovation: new estimates of drug development

cost. Journal of Health Economics, 10( 1),107-142. Retrieved from EBSCOhost.

 Fortune. (2002). Largest U.S. firms and Largest Pharmaceutical firms ranked by market value . Retrieved from

http://money.cnn.com/search/index.html?sortBy=date&primaryType=mixed&source=fort&query=larges

Getzen, T. E., & Allen, B. H. (2007). Health care economics. Hoboken, NJ: John Wiley & Sons.

Hansen, R. (1996). Cost and benefit analysis in pharmaceutical promotion and untilization decisions. Journal of

Health Economics, 13(1), 322-336. Retrieved from EBSCOhost.

Kumar,S. (2010). Drug Prices-USA Perspective. Retrieved from http://www pharmainfo.net

Levit, K., Smith, C., Cowan, C., Lazenby, H., & Martin, A. (2002). Inflation spurs health spending in 2000. Health

Affairs, 21(1), 172-182. Retrieved from EBSCOhost.

Mather, B. (1999). Incorporating clinical outcomes and economic consequences into drug formulary decisions: a

practical approach. American Journal of Managed Care. Retrieved from EBSCOhost.

Ma, J. (n.d.). Lowering Prescription Drug Prices in the United States: Are Reimportation and Internet Pharmacies the Answer? Retrieved from http://www-bcf.usc.edu/~idjlaw/PDF/15-2/15-2%20Ma.pdf

Watson, T. (August 8, 2003). Strategies for Maximizing Generic Opportunities in Payer Populations. Retrieved from http://findarticles.com/p/articles/mi_m0ONKV/is_9_4/ai_106566970