IDEAS home Printed from
   My bibliography  Save this article

The welfare effects of innovative pharmaceuticals: an international perspective from the Dutch experience


  • Apostolos Tsiachristas†
  • Ren頇oudriaan
  • Wim Groot


Policy discussions on new medicines are often focused on cost containment rather than on the benefits they produce, such as health gains and cost savings in other sectors. In this study, we identify systematic differences in policies towards pharmaceuticals between countries and calculate the welfare gains of 39 innovative pharmaceuticals introduced in the Dutch market after 1997. Welfare gains are defined as the difference between the value of a QALY gained by innovative pharmaceuticals and their costs. The review shows that there are systematic differences among pharmaceutical policies and regulations between countries. It is further found that the welfare gains of pharmaceuticals are substantial and amount to €77 per capita per year in the Netherlands. The welfare gains could be higher if institutional barriers for an efficient utilization of innovative pharmaceuticals are removed.

Suggested Citation

  • Apostolos Tsiachristas† & Ren頇oudriaan & Wim Groot, 2013. "The welfare effects of innovative pharmaceuticals: an international perspective from the Dutch experience," Applied Economics, Taylor & Francis Journals, vol. 45(9), pages 1219-1226, March.
  • Handle: RePEc:taf:applec:45:y:2013:i:9:p:1219-1226
    DOI: 10.1080/00036846.2011.628296

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    File URL:
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Tomas J. Philipson & Eric Sun, 2008. "Is the Food And Drug Administration Safe And Effective?," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 85-102, Winter.
    2. Joshua Cohen & Laura Faden & Susan Predaris & Brian Young, 2007. "Patient access to pharmaceuticals: an international comparison," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 8(3), pages 253-266, September.
    3. Groot, Wim & Maassen van den Brink, Henriëtte, 2004. "A direct method for estimating the compensating income variation for severe headache and migraine," Social Science & Medicine, Elsevier, vol. 58(2), pages 305-314, January.
    4. Frank R. Lichtenberg, 2007. "Benefits and costs of newer drugs: an update," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(4-5), pages 485-490.
    5. Pierre-Yves Crémieux & Pierre Ouellette & Patrick Petit, 2007. "Do Drugs Reduce Utilisation of Other Healthcare Resources?," PharmacoEconomics, Springer, vol. 25(3), pages 209-221, March.
    6. Frank Lichtenberg, 2006. "The Effect of Using Newer Drugs on Admissions of Elderly Americans to Hospitals and Nursing Homes: State-level Evidence from 1997 to 2003," PharmacoEconomics, Springer, vol. 24(3), pages 5-25, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rexford E. Santerre, 2011. "National and International Tests of the New Drug Cost Offset Theory," Southern Economic Journal, John Wiley & Sons, vol. 77(4), pages 1033-1043, April.
    2. Dusanee Kesavayuth & Robert Rosenman & Vasileios Zikos, 2013. "Does Personality Affect how People Perceive their Health?," Working Papers 2013-13, School of Economic Sciences, Washington State University.
    3. Ólafsdóttir, Thorhildur & Ásgeirsdóttir, Tinna Laufey & Norton, Edward C., 2020. "Valuing pain using the subjective well-being method," Economics & Human Biology, Elsevier, vol. 37(C).
    4. Karine Lamiraud & Stephane Lhuillery, 2016. "Endogenous Technology Adoption and Medical Costs," Health Economics, John Wiley & Sons, Ltd., vol. 25(9), pages 1123-1147, September.
    5. Groot, Wim & Maassen van den Brink, Henriette & van Praag, Bernard M. S., 2006. "The Compensating Income Variation of Social Capital," IZA Discussion Papers 2529, Institute of Labor Economics (IZA).
    6. Stolpe, Michael, 2003. "Ressourcen und Ergebnisse der globalen Gesundheitsökonomie: Einführung und Überblick," Kiel Working Papers 1177, Kiel Institute for the World Economy (IfW Kiel).
    7. Howley, Peter, 2017. "Less money or better health? Evaluating individual’s willingness to make trade-offs using life satisfaction data," Journal of Economic Behavior & Organization, Elsevier, vol. 135(C), pages 53-65.
    8. Verniers, Isabel & Stremersch, Stefan & Croux, Christophe, 2011. "The global entry of new pharmaceuticals: A joint investigation of launch window and price," International Journal of Research in Marketing, Elsevier, vol. 28(4), pages 295-308.
    9. Michel Bordo & John Lando-Lane, 2013. "Does Expansionary Monetary Policy Cause Asset Price Booms? Some Historical and Empirical Evidence," Working Papers Central Bank of Chile 710, Central Bank of Chile.
    10. Claude Montmarquette & Stéphanie Boulenger & Joanne Castonguay, 2014. "Les risques liés à la création de PHARMA-QUEBEC," CIRANO Project Reports 2014rp-05, CIRANO.
    11. Tomas J. Philipson & Eric Sun & Dana Goldman, 2010. "The Effects of Product Liability Exemption in the Presence of the FDA," NBER Chapters, in: Regulation vs. Litigation: Perspectives from Economics and Law, pages 137-163, National Bureau of Economic Research, Inc.
    12. Brad R. Humphreys & Bruce K. Johnson & John C. Whitehead, 2020. "Validity and reliability of contingent valuation and life satisfaction measures of welfare: An application to the value of national Olympic success," Southern Economic Journal, John Wiley & Sons, vol. 87(1), pages 316-330, July.
    13. Baldursdottir, Kristjana & Asgeirsdottir, Tinna Laufey & Olafsdottir, Thorhildur, 2023. "How sensitive is the compensating income variation to severity and adaptation?," Economics & Human Biology, Elsevier, vol. 49(C).
    14. Law, Michael R. & Grépin, Karen A., 2010. "Is newer always better? Re-evaluating the benefits of newer pharmaceuticals," Journal of Health Economics, Elsevier, vol. 29(5), pages 743-750, September.
    15. Immordino, Giovanni & Pagano, Marco & Polo, Michele, 2011. "Incentives to innovate and social harm: Laissez-faire, authorization or penalties?," Journal of Public Economics, Elsevier, vol. 95(7), pages 864-876.
    16. Alvin Headen, 2006. "Medicaid Preferred Drug Lists: Cost Containment and Side Effects," PharmacoEconomics, Springer, vol. 24(3), pages 1-3, December.
    17. Giovanni Immordino & Michele Polo, 2014. "Public Policies in Investment-Intensive Industries," World Scientific Book Chapters, in: Martin Peitz & Yossi Spiegel (ed.), THE ANALYSIS OF COMPETITION POLICY AND SECTORAL REGULATION, chapter 13, pages 365-388, World Scientific Publishing Co. Pte. Ltd..
    18. Carl Blankart & Tom Stargardt & Jonas Schreyögg, 2011. "Availability of and Access to Orphan Drugs," PharmacoEconomics, Springer, vol. 29(1), pages 63-82, January.
    19. Michael D. Bordo & John Landon-Lane, 2014. "Does Expansionary Monetary Policy Cause Asset Price Booms? Some Historical and Empirical Evidence," Central Banking, Analysis, and Economic Policies Book Series, in: Sofía Bauducco & Lawrence Christiano & Claudio Raddatz (ed.),Macroeconomic and Financial Stability: challenges for Monetary Policy, edition 1, volume 19, chapter 3, pages 61-116, Central Bank of Chile.
    20. Tomas J. Philipson & George Zanjani, 2013. "Economic Analysis of Risk and Uncertainty induced by Health Shocks: A Review and Extension," NBER Working Papers 19005, National Bureau of Economic Research, Inc.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:45:y:2013:i:9:p:1219-1226. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.