Dealing with Excessive Off-label Drug Use: Liability vs. Patent Prolongation
AbstractThe US and the EU recently introduced regulation to curb the extent of risky off-label drug use. It offers manufacturers a prolongation of patent protection or exclusivity if they invest in pediatric clinical tests. This paper shows that a reinforcement of physician liability for off-label use may be the preferred instrument for achieving dynamic efficiency. The liability threat reduces the demand for off-label use, giving manufacturers an appropriate incentive to invest in extended approval. By contrast, patent prolongation does not affect physicians' prescription decisions and increases the likelihood of investments in cases where the induced additional benefit falls short of testing costs.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0114.
Length: 21 pages
Date of creation: Jun 2009
Date of revision:
Find related papers by JEL classification:
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
- K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-03 (All new papers)
- NEP-HEA-2009-07-03 (Health Economics)
- NEP-IPR-2009-07-03 (Intellectual Property Rights)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kolstad, Charles D & Ulen, Thomas S & Johnson, Gary V, 1990. "Ex Post Liability for Harm vs. Ex Ante Safety Regulation: Substitutes or Complements?," American Economic Review, American Economic Association, vol. 80(4), pages 888-901, September.
- Schmitz, Patrick W., 2000.
"On the Joint Use of Liability and Safety Regulation,"
12536, University Library of Munich, Germany.
- Schmitz, Patrick W., 2000. "On the joint use of liability and safety regulation," International Review of Law and Economics, Elsevier, vol. 20(3), pages 371-382, September.
- Lundin, Douglas, 2000. "Moral hazard in physician prescription behavior," Journal of Health Economics, Elsevier, vol. 19(5), pages 639-662, September.
- Patricia Danzon, 1997. "Price Discrimination for Pharmaceuticals: Welfare Effects in the US and the EU," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 4(3), pages 301-322.
- Patricia M. Danzon, 1991.
"Liability for Medical Malpractice,"
Journal of Economic Perspectives,
American Economic Association, vol. 5(3), pages 51-69, Summer.
- Judith K. Hellerstein, 1998. "The Importance of the Physician in the Generic Versus Trade-Name Prescription Decision," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 108-136, Spring.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sabine Weiler).
If references are entirely missing, you can add them using this form.