The dynamics of pharmaceutical regulation and R&D investments
The paper uses a real option approach to investigate the potential impact of performance-based risk-sharing agreements for the reimbursement of new drugs in comparison with standard cost-effectiveness thresholds. The results show that the exact definition of the risk-sharing agreement is key in determining its economic effects. In particular, despite the concerns expressed by some authors, the incentive for a firm to invest in R&D may be the same or even greater than under cost-effectiveness thresholds, if the agreement is sufficiently mild in defining the conditions under which the product is not (fully) reimbursed to the firm. In this case, patients would benefit from earlier access to innovations. The price for this is less value for money for the insurer at the time of adoption of the innovation.
|Date of creation:||Aug 2013|
|Date of revision:|
|Contact details of provider:|| Postal: Vicolo Campofiore, 2 - I-37129 Verona|
Web page: http://www.dse.univr.it
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fabio Pammolli & Massimo Riccaboni & Laura Magazzini, 2010. "The productivity crisis in pharmaceutical R&D," Working Papers 06/2010, University of Verona, Department of Economics.
- Barros, Pedro Pita, 2007.
"The simple economics of risk-sharing agreements between the NHS and the pharmaceutical industry,"
8517, University Library of Munich, Germany.
- Pedro Pita Barros, 2011. "The simple economics of risk‐sharing agreements between the NHS and the pharmaceutical industry," Health Economics, John Wiley & Sons, Ltd., vol. 20(4), pages 461-470, April.
- Palmer, Stephen & Smith, Peter C., 2000. "Incorporating option values into the economic evaluation of health care technologies," Journal of Health Economics, Elsevier, vol. 19(5), pages 755-766, September.
- Patricia M. Danzon & Y. Richard Wang & Liang Wang, 2003.
"The Impact of Price Regulation on the Launch Delay of New Drugs - Evidence from Twenty-Five Major Markets in the 1990s,"
NBER Working Papers
9874, National Bureau of Economic Research, Inc.
- Patricia M. Danzon & Y. Richard Wang & Liang Wang, 2005. "The impact of price regulation on the launch delay of new drugs-evidence from twenty-five major markets in the 1990s," Health Economics, John Wiley & Sons, Ltd., vol. 14(3), pages 269-292.
- Jena, Anupam B. & Philipson, Tomas J., 2008. "Cost-effectiveness analysis and innovation," Journal of Health Economics, Elsevier, vol. 27(5), pages 1224-1236, September.
- Danzon, Patricia M & Chao, Li-Wei, 2000. "Does Regulation Drive out Competition in Pharmaceutical Markets?," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 311-57, October.
- Gérard Pouvourville, 2006. "Risk-sharing agreements for innovative drugs," The European Journal of Health Economics, Springer, vol. 7(3), pages 155-157, September.
- Rosella Levaggi & Michele Moretto & Paolo Pertile, 2010.
"Static and Dynamic Efficiency of Irreversible Health Care Investments under Alternative Payment Rules,"
2010.130, Fondazione Eni Enrico Mattei.
- Levaggi, R. & Moretto, M. & Pertile, P., 2012. "Static and dynamic efficiency of irreversible health care investments under alternative payment rules," Journal of Health Economics, Elsevier, vol. 31(1), pages 169-179.
- Margaret K. Kyle, 2007. "Pharmaceutical Price Controls and Entry Strategies," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 88-99, February.
- Lakdawalla, Darius & Sood, Neeraj, 2009. "Innovation and the welfare effects of public drug insurance," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 541-548, April.
- Golec, Joseph & Hegde, Shantaram & Vernon, John A., 2010. "Pharmaceutical R&D Spending and Threats of Price Regulation," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 45(01), pages 239-264, February.
- Cassimon, D. & Engelen, P. J. & Thomassen, L. & Van Wouwe, M., 2004. "The valuation of a NDA using a 6-fold compound option," Research Policy, Elsevier, vol. 33(1), pages 41-51, January.
- Adrian Towse & Louis P. Garrison, 2010. "Can't Get No Satisfaction? Will Pay for Performance Help?: Toward an Economic Framework for Understanding Performance-Based Risk-Sharing Agreements for Innovative Medical Products," PharmacoEconomics, Springer Healthcare | Adis, vol. 28(2), pages 93-102.
- Pennings, Enrico & Sereno, Luigi, 2011. "Evaluating pharmaceutical R&D under technical and economic uncertainty," European Journal of Operational Research, Elsevier, vol. 212(2), pages 374-385, July.
- Richard L. Shockley & Staci Curtis & Jonathan Jafari & Kristopher Tibbs, 2002. "The Option Value Of An Early-Stage Biotechnology Investment," Journal of Applied Corporate Finance, Morgan Stanley, vol. 15(2), pages 44-55.
- DiMasi, Joseph A. & Hansen, Ronald W. & Grabowski, Henry G., 2003. "The price of innovation: new estimates of drug development costs," Journal of Health Economics, Elsevier, vol. 22(2), pages 151-185, March.
- Darius Lakdawalla & Neeraj Sood, 2007. "The Welfare Effects of Public Drug Insurance," NBER Working Papers 13501, National Bureau of Economic Research, Inc.
- John A. Vernon, 2005. "Examining the link between price regulation and pharmaceutical R&D investment," Health Economics, John Wiley & Sons, Ltd., vol. 14(1), pages 1-16.
- Darren Filson, 2012. "A Markov‐perfect equilibrium model of the impacts of price controls on the performance of the pharmaceutical industry," RAND Journal of Economics, RAND Corporation, vol. 43(1), pages 110-138, 03.
When requesting a correction, please mention this item's handle: RePEc:ver:wpaper:13/2013. 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: (Michael Reiter)
If references are entirely missing, you can add them using this form.