In this paper we document a process of price convergence in the European market for pharmaceuticals and relate it to access to innovative medicines in individual countries. The EU is a peculiar case study, where free circulation of goods exists, but pricing policies are designed and implemented by Member States. Thanks to a unique census database on product sales and launches
for fifteen EU countries, we detect a process of price convergence, both in nominal and in real
terms. Therefore, we find that a faster rate of price convergence and a lower income per capita are
associated with stronger delays in launches of new medicines. Moreover, country delays tend to
be higher for innovative and first in class chemical compounds. Our results suggest that inefficiencies arise from drugs regulation, when countries widely differ in income per capita, public finance
sustainability conditions, and regulatory frameworks. Policies of external reference pricing tend to
exacerbate welfare losses. A policy of differential pricing is suggested, in order to take into account
both therapeutic value and willingness to pay
