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Is It Possible to Have Cheaper Drugs and Preserve the Incentive to Innovate: Reforming the Drug Approval Process According to Market Principles

  • Corinne Sauer


    (Jerusalem Institute for Market Studies)

  • Robert Sauer

    (University of Bristol, Institute for the Study of Labor (IZA), Jerusalem Institute for Market Studies)

This paper argues that drugs are expensive not because of a lack of competition among research-based pharmaceutical companies, but because of a lack of competition in the drug approval process. Lack of competition in the drug approval process has led to exceedingly high drug development costs. High drug development costs combined with artificially low drug prices, obtained through price control legislation and legislation that eases the entry of generic products into the market, has caused lower levels of pharmaceutical research and development, innovation, and economic growth.

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Paper provided by Jerusalem Institute for Market Studies (JIMS) in its series Working Papers with number 5.

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Length: 25 pages
Date of creation: Jun 2005
Date of revision:
Publication status: Published in Journal of Technology Transfer, 2007, 32(5), pages 509-524.
Handle: RePEc:jms:wpaper:5
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