Event summary

Biography:
Odd Rune Straume is Professor of Economics at the University of Minho in Portugal. He obtained his PhD in Economics from the University of Bergen, Norway, in 2002. He is member of the Centre for Research in Economics and Management (NIPE) at the University of Minho, Research Fellow at CESifo, Research Associate at Bergen Centre for Competition Law and Economics (BECCLE), and Editor (from 2024) of Journal of Health Economics. His main current research interests are related to competition and regulation in health care markets, but he has also done extensive research in the field of industrial organization and on topics related to globalisation and labour markets.

Abstract:
We study the competitive effects of combination therapies in pharmaceutical markets, which crucially hinge on the additional therapeutic value of combinatory use of drugs and the therapeutic substitutability with the most relevant monotherapy. With large additional therapeutic value, the introduction of combination therapies leads to higher prices and, somewhat paradoxically, may reduce the health plan´s surplus. Although combination therapies imply that drugs become both substitutes and complements, we show that drug prices increase if the firms are allowed to coordinate their prices. Allowing for price discrimination might increase allocational efficiency, but only at the expense of higher purchasing costs.

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