Analysis of Mechanisms for the Formation of Launch Price of Newly-Launched Drugs to Encourage High-Quality Innovation with Economic Theory
Objective:The paper discusses the economic theoretical underpinnings of how newly launched drugs form their launch price,the challenges,and problems.Methods:Based on the general rules of drug pricing,the study explores the mechanisms of forming a launch price from the perspectives of endogenous and exogenous pricing,asymmetric information game,competition in the innovative drug market,and new institutional economics.Conclusion and Suggestion:Establishing appropriate pricing mechanism for the launching of newly-launched drugs is a measure to play the decisive role of the market in the resource allocation while better playing the role of the government.The mechanism encouraging high-quality innovation should focus on reducing institutional transaction costs.Based on the information disclosure of innovation value and competition,we propose to classify newly-launched drugs to reduce the degree of information asymmetry and address the problem of adverse selection in the current new drug market,maximize the pricing power for high-quality innovative drugs and restrict the pricing power of monopoly for homogeneous innovations,balancing efficiency and equity.
newly-launched drugsthe mechanism for the formation of launch pricehigh-quality innovation
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