E.CA Compact

Predicting the future: How pricing regulation affects drug development

In an effort to contain healthcare costs, governments around the world are imposing increasingly stricter pricing and reimbursement conditions in particular one “me-too” medicines. We study the consequences that this may have on pharmaceutical innovation in the context of a dynamic model of drug development. Our simulations show that the negative effects of price regulation on drug development are economically significant.

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Keywords: innovation, price regulation