Although personalized medicine is becoming the new paradigm to manage some diseases, the economics of personalized medicine have only focused on assessing the efficiency of specific treatments, lacking a theoretical framework analyzing the interactions between pharmaceutical firms and healthcare...

We analyze a rationale for official authorization of patient dumping in the prospective payment policy framework. We show that when the insurer designs the healthcare payment policy to let hospitals dump high-cost patients, there is a trade-off between the disutility of dumped patients (changes...