Is It Possible to Have Cheaper Drugs and Preserve the Incentive to Innovate: Reforming the Drug Approval Process According to Market Principles

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Is It Possible to Have Cheaper Drugs and Preserve the Incentive to Innovate: Reforming the Drug Approval Process According to Market Principles

Author Info

Corinne Sauer () (Jerusalem Institute for Market Studies)
Robert Sauer (University of Bristol, Institute for the Study of Labor (IZA), Jerusalem Institute for Market Studies)

Additional information is available for the following registered author(s):

Robert M. Sauer

Abstract

This paper argues that drugs are expensive not because of a lack of competition among research-based pharmaceutical companies, but because of a lack of competition in the drug approval process. Lack of competition in the drug approval process has led to exceedingly high drug development costs. High drug development costs combined with artificially low drug prices, obtained through price control legislation and legislation that eases the entry of generic products into the market, has caused lower levels of pharmaceutical research and development, innovation, and economic growth.

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Publisher Info
Paper provided by Jerusalem Institute for Market Studies (JIMS) in its series Working Papers with number 5.

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Length: 25 pages
Date of creation: Jun 2005
Date of revision:
Publication status: Published in Journal of Technology Transfer, 2007, 32(5), pages 509-524.
Handle: RePEc:jms:wpaper:5

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Web page: http://www.jims-israel.org
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Find related papers by JEL classification:
D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
D92 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Firm Choice and Growth, Investment, or Financing
F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General
G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives

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