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| Author: | Lichtenberg, F.R. |
| Title: | Importation and innovation |
| Journal: | Economics of innovation and new technology
2007 : JUL-SEP, VOL. 16:5-6, p. 403-417 |
| Index terms: | USA models health economics pharmaceutical industry innovation markets imports prices employment product development |
| Freeterms: | drugs |
| Language: | eng |
| Abstract: | This paper aims at assessing the consequences of importation for new drug development. Presented is a simple theoretical model of drug development suggesting that the elasticity (here as: els-ty.) of innovation (as: innvn.) as to the expected price of drugs should be at least as great as the els-ty. of innvn. with respect to expected market size (as: m-sz). Examined is the cross-sectional relationship btw. pharmaceutical (here as: ph-cal.) innvn. and m-sz. among a set of diseases exhibiting substantial exogenous variation in expected m-sz. Analyzed are two different measures of ph-cal. innvn., that is, the number of i. distinct chemotherapy regimens for treating a cancer site and ii. articles published in scientific journals related to drug therapy for that cancer site. It is indicated through both of the analyses that the amount of ph-cal. innvn. increases with disease incidence. Among others, the evidence suggests that ph-cal. industry employment would also decline by at least 3.5-4 percent in response to an exogenous 10 percent decline in drug prices. |
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