HP4E5E      Half Unit
Economics of the Pharmaceutical Sector

This information is for the 2019/20 session.

Teacher responsible

Dr Panagiotis Kanavos COW.G.06


This course is compulsory on the Executive MSc in Health Economics and Policy (LSE and Chicago). This course is not available as an outside option.

Course content

The aim of this course is to introduce students to the economics of pharmaceutical sector and related policies and practices that affect national and international markets.

- To provide students with an understanding of basic features of pharmaceutical markets, how pharmaceutical markets work and how competition manifests itself in different parts of pharmaceutical markets.

- To illustrate to students how the pharmaceutical market is linked to the health care market, why it is often the focus of much regulation, and to help students understand the multidimensional goals of pharmaceutical policies.

- To introduce students to the economic and policy problems encountered in managing pharmaceutical markets and how to evaluate the impact of alternative policy approaches. The course will also give students some experience in critically evaluating the impact of policy on market outcomes.

- To facilitate consideration of various country-specific political, cultural and economic factors that may drive governments' approaches to pharmaceutical regulation. In this context, this course will help students consider the extent to which policies may be transferable.

- To enable students to analyse pharmaceutical markets from the perspectives of several main actors: governments, third party payers, the pharmaceutical industry, doctors, patients, pharmacists and wholesalers. Literature from Health Economics, Industrial Organisation and Health Policy will be incorporated into lectures, discussions and seminars.

- To introduce students to the economics of pricing and reimbursing pharmaceutical products, to explore different models of pricing and reimbursing medicines in OECD countries, including rate of return regulation, value-based pricing, cost-plus pricing, external price referencing and internal reference pricing, among others.

- To introduce students to the principles of Health Technology Assessment (HTA), its implementation across settings, the link between HTA and decision-making as well as the similarities and differences in HTA coverage recommendations and the reasons for these, based on a methodological framework developed and applied specifically for this purpose.


15 hours of lectures and 10 hours of seminars in the MT.

All students will have the opportunity to participate in additional lectures undertaken by external guests. These lectures will be run every Monday and Wednesday from 6pm to 8pm during the teaching period at LSE.

In addition, students will be given the option to participate in a three-hour webinar hosted at least 10 days before the due date of the take-home assessment. The webinar will consist of two-hours of lectures and one hour of question time.

Formative coursework

Students will be expected to produce 1 essay in the MT.

Formative coursework will comprise a 1,000 word essay to be submitted at the end of the course.

Essay questions will mirror the type of question students will have to develop for their summative assessment.

Indicative reading

• P Kanavos, Impact and Costs of Pharmaceuticals and Biotechnology; in R.M.Scheffler (ed). Handbook of Global Health Economics and Public Policy, World Scientific, pp. 107-188; 2016.

• P Kanavos , Measuring performance in off-patent drug markets: A methodological framework and empirical evidence from 12 EU Member States. Health Policy, 118(2); 229-241, 2104.

• E Mossialos, M Mrazek & T Walley (eds), Regulating Pharmaceuticals in Europe. Striving for Efficiency, Equity and Quality, Buckingham, Open University Press (2004);

• S O Schweitzer, Pharmaceutical Economics and Policy, Oxford University Press (2006);

• W S Comanor, 'The Political Economy of the Pharmaceutical Industry', Journal of Economic Literature, XXIV (September): 1178-1217 (1986);

• F M Scherer 'The Pharmaceutical Industry', Chapter 25, in: A J Culyer & J P Newhouse (Eds), Handbook of Health Economics, Vol 1, Amsterdam, Oxford, Elsevier, 2000.


Essay (100%, 4000 words) in the LT.

Essays will be based on specific case studies and will cover both conceptual as well as empirical/practical aspects of the course taught during both the lectures and the seminars. As such, students will have to demonstrate aptitude of relevant theoretical concepts (e.g. around industrial organisation, competition models, pricing models, HTA techniques, incentives and incentive structures, among others) as taught during the lectures, and combine these with empirical evidence from the literature and course materials, and practical problem solving experience, through their seminar presentations and groupwork.

Key facts

Department: Health Policy

Total students 2018/19: Unavailable

Average class size 2018/19: Unavailable

Controlled access 2018/19: No

Value: Half Unit

Guidelines for interpreting course guide information

Personal development skills

  • Leadership
  • Self-management
  • Team working
  • Problem solving
  • Application of information skills
  • Communication
  • Application of numeracy skills
  • Commercial awareness
  • Specialist skills