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Pricing of medical devices under coverage uncertainty - a modelling approach
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Girling, Alan J., Lilford, Richard and Young, Terry P. (2012) Pricing of medical devices under coverage uncertainty - a modelling approach. Health Economics, 21 (12). pp. 1502-1507. doi:10.1002/hec.1807 ISSN 1057-9230.
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Official URL: http://dx.doi.org/10.1002/hec.1807
Abstract
Product vendors and manufacturers are increasingly aware that purchasers of health care will fund new clinical treatments only if they are perceived to deliver value-for-money. This influences companies' internal commercial decisions, including the price they set for their products. Other things being equal, there is a price threshold, which is the maximum price at which the device will be funded and which, if its value were known, would play a central role in price determination. This paper examines the problem of pricing a medical device from the vendor's point of view in the presence of uncertainty about what the price threshold will be. A formal solution is obtained by maximising the expected value of the net revenue function, assuming a Bayesian prior distribution for the price threshold. A least admissible price is identified. The model can also be used as a tool for analysing proposed pricing policies when no formal prior specification of uncertainty is available. Copyright © 2011 John Wiley & Sons, Ltd.
Item Type: | Journal Article | ||||
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Divisions: | Faculty of Science, Engineering and Medicine > Medicine > Warwick Medical School > Health Sciences > Population, Evidence & Technologies (PET) Faculty of Science, Engineering and Medicine > Medicine > Warwick Medical School |
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Journal or Publication Title: | Health Economics | ||||
Publisher: | John Wiley & Sons Ltd. | ||||
ISSN: | 1057-9230 | ||||
Official Date: | 2012 | ||||
Dates: |
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Volume: | 21 | ||||
Number: | 12 | ||||
Page Range: | pp. 1502-1507 | ||||
DOI: | 10.1002/hec.1807 | ||||
Status: | Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Restricted or Subscription Access |
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