What is Differential Pricing?
‘Differential pricing’ is the practice of drug manufacturers charging different prices for the same product in different markets.
In theory, adapting drug prices to the purchasing power of consumers in different geographical or socio-economic segments could potentially be a very effective way to improve access to pharmaceuticals in low-income markets, while preserving manufacturer revenues and incentives to invest in research and development (R&D).
Differential pricing allows drug companies to signal that their pricing policies are socially responsible and consistent with their obligations to society and not just geared towards maximizing profits.
An excellent overview of the efficiencies and distortions in differential pricing theory and practice.
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