IDEAS home Printed from https://ideas.repec.org/p/cbo/wpaper/57010.html

CBO's Simulation Model of New Drug Development: Working Paper 2021-09

Author

Listed:
  • Christopher P. Adams

Abstract

This paper presents the Congressional Budget Office’s simulation model for analyzing legislative proposals that may substantially affect new drug development. The model uses estimates of changes in expected future profits or development costs to estimate the percent change in the number of drug candidates entering the various stages of human clinical trials. Given changes in decisions to enter at each stage, the model estimates when and by how much the number of new drugs entering the market will change. To illustrate the implications of the model, the paper considers a

Suggested Citation

  • Christopher P. Adams, 2021. "CBO's Simulation Model of New Drug Development: Working Paper 2021-09," Working Papers 57010, Congressional Budget Office.
    • Handle: RePEc:cbo:wpaper:57010
    as

    Download full text from publisher

    File URL: https://www.cbo.gov/system/files/2021-08/57010-New-Drug-Development.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Blume-Kohout, Margaret E. & Sood, Neeraj, 2013. "Market size and innovation: Effects of Medicare Part D on pharmaceutical research and development," Journal of Public Economics, Elsevier, vol. 97(C), pages 327-336.
    2. Daron Acemoglu & Joshua Linn, 2004. "Market Size in Innovation: Theory and Evidence from the Pharmaceutical Industry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(3), pages 1049-1090.
    3. Bhattacharya, Jayanta & Vogt, William B, 2003. "A Simple Model of Pharmaceutical Price Dynamics," Journal of Law and Economics, University of Chicago Press, vol. 46(2), pages 599-626, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anirban Basu, 2024. "Dynamic Efficiency and Pricing of Innovations with Insurance: The Case for Gene Therapies," NBER Working Papers 32480, National Bureau of Economic Research, Inc.
    2. Beth Woods & James Lomas & Mark Sculpher & Helen Weatherly & Karl Claxton, 2024. "Achieving dynamic efficiency in pharmaceutical innovation: Identifying the optimal share of value and payments required," Health Economics, John Wiley & Sons, Ltd., vol. 33(4), pages 804-819, April.

    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. Jeffrey P. Clemens & Morten Olsen, 2021. "Medicare and the Rise of American Medical Patenting: The Economics of User-Driven Innovation," CESifo Working Paper Series 9008, CESifo.
    2. Gamba, Simona & Magazzini, Laura & Pertile, Paolo, 2021. "R&D and market size: Who benefits from orphan drug legislation?," Journal of Health Economics, Elsevier, vol. 80(C).
    3. Katharina E. Blankart & Frank R. Lichtenberg, 2022. "The Effects of Off-label Drug Use on Disability and Medical Expenditure," NBER Working Papers 30440, National Bureau of Economic Research, Inc.
    4. Nicholas Bagley & Benjamin Berger & Amitabh Chandra & Craig Garthwaite & Ariel D. Stern, 2018. "The Orphan Drug Act at 35: Observations and an Outlook for the Twenty-First Century," NBER Chapters, in: Innovation Policy and the Economy, Volume 19, pages 97-137, National Bureau of Economic Research, Inc.
    5. Joshua Krieger & Danielle Li & Dimitris Papanikolaou, 2022. "Missing Novelty in Drug Development," The Review of Financial Studies, Society for Financial Studies, vol. 35(2), pages 636-679.
    6. Heidi L. Williams, 2016. "Intellectual Property Rights and Innovation: Evidence from Health Care Markets," Innovation Policy and the Economy, University of Chicago Press, vol. 16(1), pages 53-87.
    7. Malani, Anup & Reif, Julian, 2015. "Interpreting pre-trends as anticipation: Impact on estimated treatment effects from tort reform," Journal of Public Economics, Elsevier, vol. 124(C), pages 1-17.
    8. 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.
    9. Mark Pauly & Kyle Myers, 2016. "A Ricardian-Demand Explanation for Changing Pharmaceutical R&D Productivity," NBER Working Papers 22720, National Bureau of Economic Research, Inc.
    10. Iizuka, Toshiaki & Uchida, Gyo, 2017. "Promoting innovation in small markets: Evidence from the market for rare and intractable diseases," Journal of Health Economics, Elsevier, vol. 54(C), pages 56-65.
    11. John A. Romley & Neeraj Sood, 2013. "Identifying the Health Production Function: The Case of Hospitals," NBER Working Papers 19490, National Bureau of Economic Research, Inc.
    12. Beth Woods & James Lomas & Mark Sculpher & Helen Weatherly & Karl Claxton, 2024. "Achieving dynamic efficiency in pharmaceutical innovation: Identifying the optimal share of value and payments required," Health Economics, John Wiley & Sons, Ltd., vol. 33(4), pages 804-819, April.
    13. Federico Nutarelli & Massimo Riccaboni & Andrea Morescalchi, 2021. "Product recalls, market size and innovation in the pharmaceutical industry," Papers 2111.15389, arXiv.org.
    14. Pierre Dubois & Ariel Pakes, 2026. "Pharmaceutical Advertising in Dynamic Equilibrium," Working Papers hal-05573625, HAL.
    15. Massimo Florio & Simona Gamba, 2021. "Biomed Europa: After the coronavirus, a public infrastructure to overcome the pharmaceutical oligopoly," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 92(3), pages 387-409, September.
    16. Lee Branstetter & Chirantan Chatterjee & Matthew J. Higgins, 2016. "Regulation and welfare: evidence from paragraph IV generic entry in the pharmaceutical industry," RAND Journal of Economics, RAND Corporation, vol. 47(4), pages 857-890, November.
    17. Caroline Savage Bennette & Anirban Basu & Scott D. Ramsey & Zachary Helms & Peter B. Bach, 2019. "Health Returns to Pharmaceutical Innovation in the Market for Oral Chemotherapy in Response to Insurance Coverage Expansion," American Journal of Health Economics, MIT Press, vol. 5(3), pages 360-375, Summer.
    18. Jeffrey Clemens & Joshua D. Gottlieb, 2017. "In the Shadow of a Giant: Medicare’s Influence on Private Physician Payments," Journal of Political Economy, University of Chicago Press, vol. 125(1), pages 1-39.
    19. Geng, Hao & Shi, Ce Matthew, 2024. "Health policy, price regulation, and innovation: Evidence from China’s vaccine industry," Journal of Development Economics, Elsevier, vol. 167(C).
    20. Byrski, Dennis & Wang, Lucy Xiaolu, 2025. "Marketing authorization and strategic patenting: Evidence from pharmaceuticals," Journal of Public Economics, Elsevier, vol. 247(C).

    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    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:cbo:wpaper:57010. 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: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/cbogvus.html .

    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.