Essay I:First-Degree Price Discrimination achieves efficiency in monopoly settings by having the producer appropriate the total surplus, while uniform pricing leads to higher consumer surplus but is inefficient. The market for multi-indication drugs – those that have multiple uses – has two features that distinguish it from a static monopoly model. Firstly, the monopoly is time-bound and is followed by a competitive market. Secondly, manufacturers have private information about which groups of patients their drug could be useful for and must incur a cost to reveal each one. I extend Bergemann et. al (2015) to this setting to develop a mechanism which maximises consumer surplus and achieves weakly higher efficiency than First-Degree Price Discrimination (which can be inefficient as the monopolist does not internalise the long-term benefit). By conditioning market segmentation on the manufacturer's revealed information, a regulator can incentivise it to conduct costly trials for the most socially beneficial uses of their drugs and maximise achievable total and consumer surplus. Ex-post, First-Degree Price Discrimination may appear as a specific case as a result of the segmentation - as such, I reveal conditions under which First-Degree Price Discrimination may be efficient. I also provide solutions for achieving market segmentation that minimizes variance in prices or individual consumer surplus while still achieving the primary aims of maximising achievable surplus. In doing so I make the case for regulators to use market segmentation as a tool to provide incentives for manufacturers. 

Essay II: Advanced Therapy Medicinal Products (ATMPs) are novel, expensive, one-time treatments that have the potential to cure certain medical conditions, but their long-term effectiveness carries inherent risk. Risk-sharing agreements (RSAs) have been proposed as a means to mitigate the negative impacts of this uncertainty. However, traditional models of RSAs often fail to account for the irreversibility of ATMPs and their long-term implications for payers’ budgets and future decision-making, as well as the fact that payers and manufacturer interact repeatedly. 

In this paper, I develop a model in which a payer and a manufacturer engage in an infinitely repeated stochastic game. Patients arrive following an overlapping-generations framework, and the price of treatment is negotiated based on the state of the budget and population health. Effective ATMPs free up resources in the budget for future incoming patients and increase demand. The outcomes of this game are analysed under two distinct payment structures: one where payments are made upfront for each patient and another where payments are contingent on the continued effectiveness of the ATMP. Results show that when the health benefits of the ATMP are comparable to those of an outside option, the RSA improves efficiency. However, when the health benefits of the ATMP are significantly higher, the efficiency of upfront payment can improve.

Essay III: (with Erik Grönqvist, Per Johansson and August Wadell Leimdörfer)How should limited resources for health care be prioritized? Health economic evaluation can inform decision makers if new medical treatments are good value for money. The standard cost-effectiveness framework maximizes QALY gains without considering the distribution of these gains across individuals or groups. However, the way health is produced matters for most people. With general preferences for equity in society, also disease severity would matter for welfare when prioritizing. With public preferences over both disease severity and cost-effectiveness, and policymakers need to balance equity with efficiency. We provide evidence for how the public trades disease severity for cost-effectiveness from a novel striped-down discrete choice experiment, and we also provide a method for adjusting the ICER threshold to account for disease severity.