Drug Prices and Research and Development Investment Behavior in the Pharmaceutical Industry

Giaccotto, Carmelo; Santerre, Rexford E.; Vernon, John A.

doi:10.1086/426882

“…We show that a stricter price cap reduces both R&D spending on pharmaceuticals and drug prices. The results on the R&D expenditure effects of price regulations are consistent with a large body of empirical evidence (e.g., Scherer, 1993;Vernon, 2005;Giaccotto, Santerre and Vernon, 2005).…”

Section: Introductionsupporting

confidence: 84%

Do cost-sharing and entry deregulation curb pharmaceutical innovation?

Grossmann

¹

2013

Journal of Health Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper examines the role of both cost-sharing schemes in health insurance systems and entry regulation for pharmaceutical R&D expenditure, drug prices, aggregate productivity, and income. The analysis suggests that both an increase in the coinsurance rate and stricter price regulations adversely affect R&D spending in the pharmaceutical sector. In contrast, entry deregulation may lead to quality-improvements of pharmaceuticals, despite reducing price-setting power of pharmaceutical companies. Extension to an endogenous growth context suggests that, when individual labor supply depends on health status, both cost-sharing and entry barriers in the pharmaceutical sector also affect aggregate productivity and wage rates. Terms of use: Documents in EconStor mayJEL-Code: I100, L100, O300.

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“…Empirical evidence suggests that pharmaceutical companies' R&D decisions are determined by the expected return and cash flow variables, which should be connected with the size of the corresponding markets and with real drug prices (Giaccotto et al, 2005;Grabowski and Vernon, 2000). Expected returns are an important determinant of R&D spending not only for large U.S. but also for Japanese pharmaceutical companies (Mahlich and Roediger-Schluga, 2006).…”

Section: Demand and Innovationmentioning

confidence: 99%

Determinants of pharmaceutical innovation: the role of technological opportunities revisited

Rake

¹

2017

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Andersen (1999Andersen ( , 1998. I analyze a unique dataset by using an "entry stock" Poisson quasi-maximum likelihood estimator. The results reveal a rather robust and significantly positive response of the number of new pharmaceuticals, i.e., new molecular entities or new drug approvals, to market size and technological opportunities. Terms of use: Documents in

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“…28 This prevalence of generic drugs may discourage pharmaceutical innovations and developments in the future, possibly requiring the introduction of policies that extend the length of patent periods in order to encourage brand-name companies to continue producing new and innovative drugs. [28][29][30] Despite these drawbacks, the significantly lower prices of generic drugs in the US warrant consideration of the effects of government policy on pricing, and the benefits of fostering competition within the generic drug market.…”

Section: United Statesmentioning

confidence: 99%

A Global Comparison Between Brand-Name and Generic Drugs

Chawla¹,

Tofighi²,

Agarwal³

et al. 2014

IJOPP

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While the use of cheaper bioequivalent generic drugs over brand-name drugs has been widely discussed in literature, their market pricing and subsequent use is largely shaped by government policy-making as well as consumer and corporate decision-making. Analysis of literature shows that drug development and testing costs, degree of health care privatization, and pharmaceutical reimbursement all impact the profitability of brand-name drugs within and beyond their patent period. Furthermore, jurisdiction-specific government controls and policies influence the affordability and accessibility of both drug variants. This literature review focuses on: a) analyzing the policies and expenses associated with gaining approval for brand-name and generic drugs, and their subsequent influence on drug pricing; and b) comparing and contrasting government controls and policies between Canada, the United States, European nations, and developing countries.

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Drug Prices and Research and Development Investment Behavior in the Pharmaceutical Industry

Cited by 128 publications

References 18 publications

Do cost-sharing and entry deregulation curb pharmaceutical innovation?

Do cost-sharing and entry deregulation curb pharmaceutical innovation?

Determinants of pharmaceutical innovation: the role of technological opportunities revisited

A Global Comparison Between Brand-Name and Generic Drugs

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