Products Liability and Prescription Drug Prices in Canada and the United States
This article provides the first estimate of the degree to which product liability costs in this country contribute to the observed differences in pharmaceutical prices between the United States and Canada. Measures of liability risk show up as large and strongly significant explanatory variables in regressions of U.S. and Canadian price differences. Ire the sample used here, accounting for liability effects reduces the mean of the predicted price difference distribution by about one-half and the median by about one-third. These reductions come about by virtually eliminating the upper tail of the distribution. Though liability effects cannot account for all the observed price differences in this sample, they clearly must play a role. Efforts to explain international price differences in drug products which do not take account of the effects of differing legal systems are missing an important effect and suffer from a substantial omitted variable bias. Copyright 1997 by the University of Chicago.
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
When requesting a correction, please mention this item's handle: RePEc:ucp:jlawec:v:40:y:1997:i:1:p:203-43. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division)
If references are entirely missing, you can add them using this form.