Two-Part Pricing for Patent Protected Medicines – An Economic Analysis from a Swedish Health Care Perspective Holm, H J  and Hertzman, P OBJECTIVES: Many new medicines are targeting small patient populations. In order to recoup R&D costs the medicines are highly priced. A dilemma is that the price per patient (or pill or vial) can be seen as blocking access. As the marginal cost (MC) of a new product is lower than the charged price there is a well-known waste. One option is to establish a two-part pricing modelwith a “subscription” price plus a usage price close to MC. The objective of this paper is to provide an economic analysis based on theories and concepts from microeconomics and industrial organization of two-part pricing in the market for patent protected medicines (PPM). METHODS: The situation will be analyzed from a game theoretical and an empirical perspective. The starting point is the Swedish Health Care system with focus on oncology. A two-part pricing contractual arrangement will also be discussed for some other EU countries. RESULTS: Demand side consists of a publicly funded local buyer who represents a large number of potential users. This often leads to a bargaining solution where price is below the one set by a standard monopoly. A two-part pricing - where the buyer pays a substantial fixed-fee to get access to the PPM and a per unit price equal to marginal cost – may increase efficiency. However, numerous issues need to be taken into account when considering introducing two-part pricing, for example uncertainty and risk, the operation on many markets, free-riders and reselling. CONCLUSIONS: Quantities are unlikely to be efficient with the current pricing model in the Swedish oncological market. A two-part pricing is likely to increase the efficiency in such markets but is also associated with some serious challenges.