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"There is as much about catch up than any new industry pricing paradigm from Asda to us," analysts at Shore Capital wrote in a note.
"I think payers will say, 'If the product works and it creates value, we will reward you for it,' " said Anthony Farino, a pharmaceutical industry consultant at PricewaterhouseCoopers. " 'If not, we won't reward you.' " It is far too soon to tell whether such a pricing paradigm can actually work, in particular because it can be difficult in many cases to measure how well a drug is working.
The valuation procedure outlined above can be referred to as the arbitrage-free pricing paradigm.
Whatever the eventual deal, it is almost sure to set a price record and perhaps to trot out a phrase that hasn't been heard in at least five minutes: "shift the pricing paradigm".
In particular, the strict comparison property of linear BSDEs can be employed to show that replication (or superhedging) will indeed yield prices for derivatives that are consistent with the arbitrage-free pricing paradigm.
Together with a number of simulation results, these investigations demonstrate that CPS is an excellent example for a simple, transparent, market-managed, and feasible Internet pricing scheme that eventually extends the well-known spatial edge pricing paradigm into the time dimension.
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Last but not least, it should be acknowledged that the valuation of derivatives based on arbitrage-free replication (or superhedging) should not be seen as the most realistic pricing approach, but rather a mathematical idealization of a much more complex situation, and thus other pricing paradigms should also be examined.
OPEC ministers and Wall Street analysts talk of a new "price paradigm".
"We're all concerned about safety," Kahn told me last week, "but at what price?" The policing paradigm, he and Garcia argued, has shifted from solving crimes to gathering, storing and sharing information.
Value based pricing constitutes a paradigm shift from volume to value.
Value based pricing is a paradigm shift that distributes risk among payer and industry and offers measurable value to payers.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com