Price justification

Despite the existence of direct and indirect mechanisms for pharmaceutical price regulation in most countries, some authors put forward reasons for a growing opposition to the need to regulate prices.2,3 The discussion on the possible lack of justification for drug price regulation policies to improve welfare can be built on three types of argument, which it is important to understand. 

First, the pharmaceutical market failures mentioned above may be empirically inconsequential, which may either render their regulation unnecessary or make it advisable to use more flexible price control policies. For example, justifications for regulation that are based on the virtual absence of competition seem weak when one observes markets with products whose patent has expired. When a patent expires barriers to entry should disappear, since the composition of the active ingredient becomes public, and other companies should not have too many problems to reproduce the production process. The reasons brandished for price regulation when any company can manufacture a generic to compete with the brand product find no justification in theory. 

However, the situation most commonly recognized is that competition in the market of patented prescription drugs is insufficient to produce an optimum level of information or an optimum level of welfare, which makes it necessary to establish some form of regulation. However, price regulation in the markets of non-prescription drugs and drugs whose patent has expired lacks theoretical justification. 

The purpose of this chapter is to present the main economic characteristics of reference pricing (RP) as a system for the public funding of pharmaceuticals financed by the public sector. The following sections deal with the definition and objectives of RP and analyse the features of the various reference pricing systems that are applied internationally. This is followed by a look at the justification for RP from the economic point of view. We then go on to analyse the impact of RP policies, especially with regard to expenditure, consumption and drag prices. In the final section we discuss what can be expected from the application of RP to the Spanish health system. 

With current demands for higher cycles, the use and reuse of variable quality makeup water sources, and strong competitive pressures from water treatment service companies, these indices are, unfortunately, increasingly being used as primary evidence to customers in justifications for change, program effectiveness, or price comparisons. 

The justification for this model is the fact that any share that sits well above the line (i.e. having a relatively high yield) for any reason will appear attractive to the market, investors will buy it, its price will rise as a result of this demand and its yield will thus fall back to the market line. Conversely, any share that is well below the line will appear unattractive, investors will sell, the price will fall and the yield will rise. 

Selective hydrogenation has been successfully employed commercially to convert the butadienes to mono-olefins. Current sulfuric acid prices give considerable justification for adding these facilities in cases where severe cracking conditions are enqiloyed. 

DON T accept any price reduction during the bid evaluation without a real justification. 

In the 1980s, fundamental changes took place in the state-owned sector with the so-called privatization of the industry. First in Chile, then in the UK, the assets of the publicly-owned electricity authorities were vested in companies which issued equity shares to the general public. This change in ownership was coupled with a fundamental shift in the way electricity was produced and sold. New, cheaper, technologies such as gas-fired, combined cycle, gas turbine plant, which could be built more quickly than the traditional coal-fired steam turbine plant, and which is less labour intensive in its operation, was introduced extensively in the UK. The separate producers of electricity competed with each other on price (per kWh) to win market share. It is alleged, with some justification in the UK, that such competition has reduced the price to the end-user. 

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