21 October 2018 - A basic concept of economics is that a price stems from the intersection between supply and demand curves in any common market. However, there are markets where consumers do not pay for goods directly, like in healthcare, and prescription drugs are a well-known example. 

Not by chance called ‘ethical drugs’, their importance for patients’ health makes them ‘merit goods’ regulated beyond the common laws of the market. 

Ethical drugs are mostly prescribed by physicians to patients and funded by public expenditure in highly developed countries, such as Western European ones, characterised by well-established welfare systems. Accordingly, price regulation schemes have long been an unavoidable policy response to control public pharmaceutical expenditure.

Read European Journal of Health Economics editorial