Reimbursement for new health technologies. Breakthrough pharmaceuticals as a 20th century challenge

The regulation of pricing and trade for in-patent medicines within the European pharmaceutical sector presents a major challenge. In conditions of large sunk costs and consumers with differential willingness to pay--between different Member States--an efficient way of pricing in-patent medicines is through price discrimination, by which more is charged in markets that can bear it and re-exports are prevented from undercutting this strategy. Parallel trade and the use of international price comparisons by government regulators can result in pressure for price convergence with consequent delays in launching products in certain markets. Imposing free movement of pharmaceuticals may particularly harm patients in lower income Member States, who may find pharmaceuticals more expensive or unavailable. Data on first consumption of important new pharmaceuticals show long delays for patients in certain Member States.