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The effect of Canadian imports on prescription drug prices in the U.S

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  • Hamilton, Jonathan H.

Abstract

Reimportation of prescription drugs by American consumers from Canada has been a high-visibility policy issue. The large price discrepancies for some patented drugs arise from market pricing in the U.S. and a system of administered pricing in Canada. The model assumes that there are two classes of U.S. consumers: one group who cannot reimport drugs at any cost, and a second group with a distribution of reimportation costs. Under the assumption that the group who can reimport drugs has lower willingness to pay, reimportation serves as a mechanism for price discrimination in the U.S. market.

Suggested Citation

  • Hamilton, Jonathan H., 2012. "The effect of Canadian imports on prescription drug prices in the U.S," Regional Science and Urban Economics, Elsevier, vol. 42(6), pages 1003-1008.
    • Handle: RePEc:eee:regeco:v:42:y:2012:i:6:p:1003-1008
    DOI: 10.1016/j.regsciurbeco.2011.12.003
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    References listed on IDEAS

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    More about this item

    Keywords

    Price discrimination; Parallel imports; Drug prices;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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