Differential Pricing of Pharmaceuticals in the Internet Age

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Abstract

The Internet provides healthcare consumers with more information about available prices and provides pharmaceutical manufacturers with more information about consumers' willingness to pay. The former effect tends to undermine price differences while the latter tends to support them. We believe that the former effect will dominate and that the Internet will undermine differential pricing of pharmaceuticals. This should be a concern for manufacturers and policy makers, because differential pricing of pharmaceuticals can increase access for the poor and increase incentives for innovation. We suggest strategic responses for manufacturers and policy makers.

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