Qualitative study on the price of drugs for multiple sclerosis

ObjectiveTo describe pricing decisions, justifications, and attitudes among current and former biotech industry executives for companies that manufacture multiple sclerosis disease-modifying therapies.MethodsFour leaders in biotech who have been directly involved in multiple sclerosis disease-modifying therapy pricing or marketing volunteered to participate in 30-minute semistructured interviews conducted via telephone. An expert in qualitative methods moderated and analyzed the interviews alongside the principal investigator. Brief, preinterview online surveys were also administered to provide additional context and insight for discussion. Interviews were audio-recorded and professionally transcribed.ResultsParticipants consistently stated that initial price decisions were dictated by the price of existing competitors in the market. Revenue maximization and corporate growth were drivers of price escalations in the absence of continued market penetration. Lower revenue predictions outside the United States also informed pricing strategies. The growing complexity and clout of drug distribution and supply channels were also cited as contributing factors. Although decisions to raise prices were motivated by the need to attract investment for future innovation, recouping drug-specific research and development costs as a justification was not strongly endorsed as having a significant influence on pricing decisions.ConclusionsContrary to prevailing narratives that underscore drug development costs, findings from our interviews suggest that the existing price ecosystem, overall corporate growth, international pricing disparities, and supply chain–related distortions may play a more central role in drug pricing decision.

Pricing Decisions in International Industrial Markets – The Link between Standardization at Market Entry, Pricing Capability, and Price Reactions

International pricing decisions are one of the most paramount decisions managers face. By linking international marketing and competitive dynamics this paper reveals a relationship between product and price standardization at international market entry and defensive price reactions after market entry based on the concept of path dependencies. The empirical evaluation of a structural model shows that standardization positively influences slack resources after adaptation decision and in addition price formation capabilities. In line with the awareness-motivation-capability framework our results show a negative impact of price adaptive capabilities on price reaction.

International Liquidity and Exchange Rate Dynamics *

We provide a theory of the determination of exchange rates based on capital flows in imperfect financial markets. Capital flows drive exchange rates by altering the balance sheets of financiers that bear the risks resulting from international imbalances in the demand for financial assets. Such alterations to their balance sheets cause financiers to change their required compensation for holding currency risk, thus affecting both the level and volatility of exchange rates. Our theory of exchange rate determination in imperfect financial markets not only helps rationalize the empirical disconnect between exchange rates and traditional macroeconomic fundamentals, it also has real consequences for output and risk sharing. Exchange rates are sensitive to imbalances in financial markets and seldom perform the shock absorption role that is central to traditional theoretical macroeconomic analysis. Our framework is flexible; it accommodates a number of important modeling features within an imperfect financial market model, such as nontradables, production, money, sticky prices or wages, various forms of international pricing-to-market, and unemployment.