The dynamics of pharmaceutical regulation and R&D investments
AbstractThe paper uses a real option approach to investigate the potential impact of performance-based risk-sharing agreements for the reimbursement of new drugs in comparison with standard cost-effectiveness thresholds. The results show that the exact definition of the risk-sharing agreement is key in determining its economic effects. In particular, despite the concerns expressed by some authors, the incentive for a firm to invest in R&D may be the same or even greater than under cost-effectiveness thresholds, if the agreement is sufficiently mild in defining the conditions under which the product is not (fully) reimbursed to the firm. In this case, patients would benefit from earlier access to innovations. The price for this is less value for money for the insurer at the time of adoption of the innovation.
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Bibliographic InfoPaper provided by University of Verona, Department of Economics in its series Working Papers with number 13/2013.
Date of creation: Aug 2013
Date of revision:
pharmaceutical regulation; real options; R&D; risk-sharing;
Find related papers by JEL classification:
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-08-05 (All new papers)
- NEP-COM-2013-08-05 (Industrial Competition)
- NEP-CSE-2013-08-05 (Economics of Strategic Management)
- NEP-IND-2013-08-05 (Industrial Organization)
- NEP-INO-2013-08-05 (Innovation)
- NEP-REG-2013-08-05 (Regulation)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- #HEJC papers for September 2013
by academichealtheconomists in The Academic Health Economists' Blog on 2013-08-31 23:01:38
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