Health economics

Pierre Dubois, Morten Sæthre, 04 July 2020

Differences in regulated pharmaceutical prices within the European Economic Area create arbitrage opportunities that pharmacy retailers can access through parallel imports. For prescription drugs under patent, parallel trade affects the sharing of profits among an innovating pharmaceutical company, retailers, and parallel traders. This column discusses recent findings showing that in a country which does not regulate pharmacy retailers’ margins, retailer incentives to bargain lower wholesale prices play a significant role in fostering parallel trade penetration, and that banning parallel imports would benefit manufacturers.

Apostolos Davillas, Andrew M Jones, 30 June 2020

The economic and policy response to COVID-19 has created specific gradients in both exposure to the disease itself and in exposure to the economic impact of the lockdown. This column uses survey data to show that inequality in psychological distress has increased since the pandemic in the UK. However, the proportion of inequality explained by observed individual circumstances has decreased. Pre-pandemic, the largest contributors were financial, employment and housing conditions. By April 2020, age and gender accounted for a larger share, through the impact of the pandemic on mental wellbeing among young people. Working in COVID-affected industries, household composition and parental occupation have also increased their association with the inequality in psychological distress. 

Lena Edlund, Cecilia Machado, 27 June 2020

The urban renewal that transformed many US inner cities may have hit its first major speed bump with the outbreak of Covid-19. The ‘space versus commute’ trade-off has been thrown into doubt and confusion by work-from-home orders. This column draws on socioeconomic history, arguing that a mass exodus of skilled professionals to the suburbs could have major implications for inner city areas. Although this could spell the return to the homicidal days of the 1980s, the authors argue that this may not be the case – the reason being: cell phones and how they have impacted illicit drug retailing.

Divya Kirti, Mu Yang Shin, 20 June 2020

The grim impact of COVID-19 – extensive financial dislocations across asset classes and potentially large increases in morbidity and mortality – could pose a challenge to the insurance industry, particularly life insurers. This column urges central banks looking to preserve credit supply to account for changes in insurer risk appetite, which could take place well before capital levels approach regulatory thresholds. Financial stability assessments should examine the implications of the pandemic for insurers, which operate in some countries on a comparable scale to banks.

M. Aykut Attar, Ayça Tekin-Koru, 11 June 2020

As governments begin to ease lockdown measures over the coming months, understanding how effectively countries have applied social distancing practices will be essential. This column introduces a Model-Inferred measure of latent social DIStancing (MIDIS) and calculates the measure for 44 countries using daily data and an epidemiology model. Mobility data from Apple and Google indicate that the measure can accurately measure distancing, and the measure also reflects governmental and behavioural responses while maintaining a robust relationship with daily output losses.

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