Pris- og avanseregulering i legemiddelmarkedet. En prinsipiell diskusjon og en vurdering av den norske modellen

The pharmaceutical market is characterised by market power on the supply side, mainly due to the patent system, and price-inelastic demand because of substantial third-party payments and asymmetric information. As a consequence, most countries regulate prices of prescription drugs. When regulating prices, one has to trade-off low prices of the existing drugs against the incentive for research and development of new drugs. Price regulation of prescription drugs implies that the price-cost margins of distributors and pharmacies also will be regulated. This raises a concern for consumer access to pharmaceuticals as well as the quality of pharmacy services. In regulating prices of prescription drugs a health authority has to balance many concerns. This report discusses principles of price regulation of pharmaceuticals and regulation of price-cost margins of pharmacies. Moreover, we take a closer look at the specific model chosen by the Norwegian government, and discuss some potential amendments