Chapter 1 briefly introduces the motivation, the purpose, and the key findings of the Dissertation, while Chapter 5 concludes the Dissertation.
Chapter 2 sets up a three-country model to examine the optimal external reference pricing (ERP) choice. Without the foreign price control, the home social welfares under both approaches are the same if the home is too large, while the average-price approach is more socially desirable if the home market size is relatively large, otherwise the lowest-price approach. With the foreign price control, the lowest-price approach is always more socially desirable. Moreover, the foreign price control either increases or decreases the home social welfare.
Chapter 3 explores the optimal ERP policy under incomplete information. Under informed manufacturer (G1), only the pooling policy is an equilibrium, and the pooling-ERP level is the same as a low-type one under full information (GF). Under uninformed manufacturer (G2), the pooling policy is an equilibrium if the difference between the two types is comparatively large and the probability of a high-type is great enough; otherwise, the separating policy is an equilibrium. In addition, the home social welfare under G2 is no worse than that under G1.
Chapter 4 incorporates the reimbursement policy to examines whether or not ERP is socially desirable. For direct sales channel, the home social welfare is worse-off with ERP if the home copayment rate is too high. The result is robust under indirect sales channel. Moreover, the home social welfare (brand-name profit) under the pharmacy-purchasing-price ERP is larger than that under the ex-factory-price ERP if the home copayment rate is high enough.

LIST OF TABLES iii
LIST OF FIGURES iv
ABSTRACT v
CHAPTER 1. INTRODUCTION 1
CHAPTER 2. EXTERNAL REFERENCE PRICING AND FOREIGN PRICE CONTROL: LOWEST-PRICE APPROACH AND AVERAGE-PRICE APPROACH 6
2.1. Introduction 6
2.2. Model 10
2.3. Optimal ERP Policy without A Foreign Price Control 11
2.3.1. Lowest-price Approach 11
2.3.2. Average-price Approach 13
2.3.3. Policy Decision 15
2.4. Optimal ERP Policy with A Foreign Price Control 18
2.4.1. Lowest-price Approach 19
2.4.2. Average-price Approach 20
2.4.3. Policy Choice 22
2.5. Conclusion 25
CHAPTER 3. EXTERNAL REFERENCE PRICING AND INCOMPLETE INFORMATION 28
3.1. Introduction 28
3.2. ERP under Full Information (GF) 31
3.3. ERP with Informed Manufacturer (G1) 33
3.3.1. Pooling Policy 34
3.3.2. Separating Policy 36
3.3.3. Optimal Policy 38
3.4. ERP with Uninformed Manufacturer (G2) 39
3.4.1. Pooling Policy 39
3.4.2. Separating Policy 41
3.4.3. Policy choice 45
3.5. Conclusion 48
CHAPTER 4. EXTERNAL REFERENCE PRICING AND NATIONAL HEALTHCARE POLICY 57
4.1. Introduction 57
4.2. Basic Model 61
4.3. Direct Sale Channel 62
4.3.1. Without ERP 62
4.3.2. With ERP 64
4.3.3. With vs. Without ERP 66
4.4. Indirect Sales Channel 68
4.4.1. Without ERP 68
4.4.2. With EFP ERP 69
4.4.3. With PPP ERP 70
4.4.4. With vs. Without ERP 73
4.5. Conclusion 74
CHAPTER 5. CONCLUSION 79
REFERENCES 82

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