Pharmaceutical price regulation : national policies versus glofal interests / Patricia M. Danzon.

Format:

Book

Author/Creator:

Danzon, Patricia Munch, 1946-

Language:

English

Subjects (All):

Drugs--Prices--United States.

Drugs.

Drugs--Prices.

United States.

Pharmaceutical industry--United States.

Pharmaceutical industry.

Pharmaceutical policy--United States.

Pharmaceutical policy.

Physical Description:

vii, 107 pages : illustrations ; 23 cm

Place of Publication:

Washington, D.C. : AEI Press, publisher for the American Enterprise Institute, 1997.

Summary:

The high cost of R&D makes pharmaceuticals particularly vulnerable to aggressive price regulation. Yet even stringent price regulatory systems have failed to control drug expenditures. The challenge for public policy, the author states, is securing a balance between controlling health care spending today and preserving incentives for innovative R&D for the health of future generations.

Increasing global regulation of drug prices and expenditures already affects the efficiency of pharmaceutical R&D and of health care delivery, with important implications for patient care now and in the future. The author examines the effect of existing foreign regulation -- price controls, rate-of-return regulations, and industrial policies -- on U.S. and other multinational producers of innovative drugs. She explores the growing threat to global revenues from the regulatory use of international price comparisons and the increasing threat from parallel trade.

Contents:

2 The Economics of Pharmaceutical Costs and Pricing 5

The Cost Structure of Innovative Pharmaceuticals 5

The Economics and Politics of Drug Price Regulation 9

Optimal Pricing to Share Joint Costs 11

3 Regulation of Pharmaceutical Prices and Expenditures 15

The Objectives of Price Regulation 15

Forms of Price Regulation 16

4 Effects of Regulation on Drug Prices and Expenditures 30

Price Indexes 30

Growth in Drug Expenditures 37

Volume per Capita 39

Mix of Drugs 41

5 Effects of Regulation on Innovation 46

Innovation Strategies of the Pharmaceutical Firm 47

Revenue Effects of Regulation 49

Effects of Regulation on the Cost of Capital 56

Effects on Domestic and Foreign Firms 56

Empirical Evidence 58

6 Effects of Regulation on Productivity 65

Incentive Effects of Biased Regulation 66

Data and Empirical Methods 68

Empirical Results 69

7 Cross-national Multiplier Effects of Regulation 84

Welfare Implications of Parallel Trade 85

Policy Options 89

2-1 The Cost Structure of Pharmaceuticals: Discounted Present Value at Launch 6

4-1 Price Indexes in Selected Countries, Relative to the United States, 1992 31

4-2 Growth in Real per Capita Expenditures on Pharmaceuticals in Selected Countries, 1970-1990 38

4-3 Drug Volume per Capita in Selected Countries, 1981-1990 40

4-4 Markets for Single-Molecule Cardiovascular Products (Outpatient Pharmacy) in Selected Countries, 1992 43

5-1 R&D Share of Sales in Selected Countries, Relative to the United States, 1981-1991 61

6-1 Growth in Number of Employees in Selected Countries, 1975-1990 70

6-2 Value Added per Employee in Selected Countries, Relative to the United States, 1970-1990 72

6-3 Value Added per Employee in Selected Countries, Relative to the United States, 1981-1990 73

6-4 Growth in Gross Fixed Capital Formation in Selected Countries, 1975-1990 74

6-5 Growth in Gross Fixed Capital Formation per Employee in Selected Countries, 1975-1990 75

6-6 Labor Compensation per Employee in Selected Countries, Relative to the United States, 1970-1990 77

6-7 Hypothetical Ex Post Return to Physical Capital, Assuming No Intangible Capital, 1976-1990 79

4-1 Price per Standard Unit in Selected Countries, Relative to the United States 35

5-1 Growth in Real R&D Expenditures in Selected Countries, 1981-1991 59.

Notes:

Includes bibliographical references (pages 97-100).

ISBN:

0844739820

0844739839

OCLC:

34477106