Objectives: The Dental and Pharmaceutical Benefits Agency (TLV) is responsible for deciding which prescription pharmaceuticals should be subsidized in Sweden. Cost-effectiveness analyses are fundamental to its decision-making, but future price reductions following patent expiry are excluded from these analyses. The purpose of this study is to investigate and illustrate the economic and strategic aspects of including these future price changes in reimbursement decisions for prescription pharmaceuticals. Methods: We construct a Markov model in R to serve as a laboratory and evaluate the cost-effectiveness of a completely fictional drug, Liunek, under eight sets of assumptions and study differences in incremental cost-effectiveness ratios. Results: Including future price changes in TLV's reimbursement decisions will lead to increased healthcare expenditures if producers respond by raising prices, but may strengthen incentives to develop new pharmaceuticals. Policy implications: Sweden needs to decide whether it is TLV's responsibility to incentivize the development of new pharmaceuticals, and to what extent this should be done.