Four degrees of price discrimination - examples from pharmacoeconomics (original) (raw)

2017

Abstract

OBJECTIVES: To present the four degrees of price discrimination based on the criteria of quantity/quality differentiation and the individual/group patient differentiation. To answer the question of how are therapies valued relative to one another. METHODS: Firstly, we present a schematic representation of the traditional three degrees of price discrimination dependent on whether the seller targets individuals or groups, and whether buyers wish to use quantity or quality discounts. Secondly, we introduce the fourth degree of price discrimination on the example of the pharmaceuticals market. Drugs have different qualitative features that in our example are measured in percentage of sustained virological response, and/or different toxicities. We try to measure these qualitative values in the quantity/quality differentiation and conjecture a relation with the price of a drug. RESULTS: Economics recognises a set of three degrees of price discrimination dependent on whether the seller tar...

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