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Do Important Drugs Reach the Market Sooner?

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  • David Dranove
  • David Meltzer

Abstract

Since the Food and Drug Administration (FDA) Amendments of 1962, the average time from a drug's first worldwide patent application to its approval by the FDA has risen from 3.5 to 13.5 years. FDA policies and manufacturers' incentives suggest that more important drugs may have reached the market sooner. To test this, we develop measures of "time to approval" and "importance," and determine how the latter affects the former. Our results indicate that more important drugs are developed and approved more rapidly than less important drugs. These results imply that the costs of approval lags have probably been overstated and challenge estimates of the returns to research and development in the pharmaceutical industry.

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Bibliographic Info

Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 25 (1994)
Issue (Month): 3 (Autumn)
Pages: 402-423

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Handle: RePEc:rje:randje:v:25:y:1994:i:autumn:p:402-423

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Cited by:
  1. Ludwig, Jens & Marcotte, Dave E. & Norberg, Karen, 2009. "Anti-depressants and suicide," Journal of Health Economics, Elsevier, vol. 28(3), pages 659-676, May.
  2. Ando, Amy, 1998. "Delay on the Path to the Endangered Species List: Do Costs and Benefits Matter," Discussion Papers dp-97-43-rev, Resources For the Future.
  3. Boyan Jovanovic, 2004. "The Pre-Producers," 2004 Meeting Papers 91, Society for Economic Dynamics.
  4. Tannista Banerjee & Ralph Siebert, 2013. "The Impact of R&D Cooperation on Drug Variety Offered on the Market: Evidence from the Pharmaceutical Industry," Auburn Economics Working Paper Series auwp2013-20, Department of Economics, Auburn University.
  5. Patricia M. Danzon & Sean Nicholson & Nuno Sousa Pereira, 2003. "Productivity in Pharmaceutical Biotechnology R&D: The Role of Experience and Alliances," NBER Working Papers 9615, National Bureau of Economic Research, Inc.
  6. Ernst Berndt & Iain Cockburn & Karen Grépin, 2006. "The Impact of Incremental Innovation in Biopharmaceuticals," PharmacoEconomics, Springer, vol. 24(2), pages 69-86, December.
  7. Andrew Epstein & Scott Johnson, 2012. "Physician response to financial incentives when choosing drugs to treat breast cancer," International Journal of Health Care Finance and Economics, Springer, vol. 12(4), pages 285-302, December.
  8. Fiona Scott Morton, 1997. "The Objectives of the FDA's Office of Generic Drugs," NBER Working Papers 6143, National Bureau of Economic Research, Inc.

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