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Dealing with Excessive Off-label Drug Use: Liability vs. Patent Prolongation

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Author Info
Stefan Felder ()
Anja Olbrich
Abstract

The 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.

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Publisher Info
Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0114.

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Length: 21 pages
Date of creation: Jun 2009
Date of revision:
Handle: RePEc:rwi:repape:0114

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Related research
Keywords: Off-label use; patent protection; exclusivity; liability;

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

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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.:
  1. Lundin, Douglas, 2000. "Moral hazard in physician prescription behavior," Journal of Health Economics, Elsevier, vol. 19(5), pages 639-662, September. [Downloadable!] (restricted)
  2. Danzon, Patricia M., 2000. "Liability for medical malpractice," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 26, pages 1339-1404 Elsevier. [Downloadable!] (restricted)
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  3. Steven Shavell, 1984. "A Model of the Optimal Use of Liability and Safety Regulation," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 271-280, Summer. [Downloadable!] (restricted)
  4. Schmitz, Patrick W., 2000. "On the Joint Use of Liability and Safety Regulation," MPRA Paper 12536, University Library of Munich, Germany. [Downloadable!]
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  5. 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. [Downloadable!] (restricted)
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This page was last updated on 2009-12-2.

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