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Technology, Regulation, and Market Structure in the Modern Pharmaceutical Industry

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  • Peter Temin

Abstract

This paper describes the transformation of the American pharmaceutical industry into its modern configuration in the 1950s. The industry was faced with new regulatory and technological conditions which changed both the way drugs were marketed and what drugs were marketed. The new conditions led to substantially larger drug firms and increased vertical integration, but not to increased concentration or relative profitability in the drug industry. The reasons for this pattern of development stem from the interaction among the FDA's regulations on drug marketing, the limits of patent protection, and the nature of the new technology.

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  • Peter Temin, 1979. "Technology, Regulation, and Market Structure in the Modern Pharmaceutical Industry," Bell Journal of Economics, The RAND Corporation, vol. 10(2), pages 429-446, Autumn.
  • Handle: RePEc:rje:bellje:v:10:y:1979:i:autumn:p:429-446
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    Cited by:

    1. Abbott, Thomas III, 1995. "Price regulation in the pharmaceutical industry: Prescription or placebo?," Journal of Health Economics, Elsevier, vol. 14(5), pages 551-565, December.
    2. Furman, Jeffrey L. & MacGarvie, Megan J., 2007. "Academic science and the birth of industrial research laboratories in the U.S. pharmaceutical industry," Journal of Economic Behavior & Organization, Elsevier, vol. 63(4), pages 756-776, August.
    3. Pakes, Ariel & Nitzan, Shmuel, 1983. "Optimum Contracts for Research Personnel, Research Employment, and the Establishment of "Rival" Enterprises," Journal of Labor Economics, University of Chicago Press, vol. 1(4), pages 345-365, October.
    4. F. M. Scherer, 1993. "Pricing, Profits, and Technological Progress in the Pharmaceutical Industry," Journal of Economic Perspectives, American Economic Association, vol. 7(3), pages 97-115, Summer.
    5. Athreye, Suma & Godley, Andrew, 2008. "Internationalising to create Firm Specific Advantages: Leapfrogging strategies of U.S. Pharmaceutical firms in the 1930s and 1940s & Indian Pharmaceutical firms in the 1990s and 2000s," MERIT Working Papers 051, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. Hartnell, Gaynor, 1996. "The innovation of agrochemicals: regulation and patent protection," Research Policy, Elsevier, vol. 25(3), pages 379-395, May.
    7. Cohen, Wesley M., 2010. "Fifty Years of Empirical Studies of Innovative Activity and Performance," Handbook of the Economics of Innovation, Elsevier.
    8. Ariel Pakes & Zvi Griliches, 1984. "Patents and R&D at the Firm Level: A First Look," NBER Chapters,in: R&D, Patents, and Productivity, pages 55-72 National Bureau of Economic Research, Inc.
    9. Bhaven N. Sampat, 2015. "Intellectual property rights and pharmaceuticals: The case of antibiotics," WIPO Economic Research Working Papers 26, World Intellectual Property Organization - Economics and Statistics Division.
    10. Patricia M. Danzon & Eric L. Keuffel, 2014. "Regulation of the Pharmaceutical-Biotechnology Industry," NBER Chapters,in: Economic Regulation and Its Reform: What Have We Learned?, pages 407-484 National Bureau of Economic Research, Inc.

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