Timely, Cheap, or Risk-Free? The Effect of Regulation on the Price and Availability of New Drugs
Author:
Levaggi Laura1ORCID, Levaggi Rosella2ORCID
Affiliation:
1. Faculty of Engineering, Free University of Bolzano-Bozen, Piazza Università, 1, 39100 Bolzano, Italy 2. Department of Economics and Management, University of Brescia, Via San Faustino 74b, 25100 Brescia, Italy
Abstract
The high level of regulation of innovative drugs on the market, which is necessary to protect consumers, produces important effects on drug availability and innovation. In public healthcare systems, the need to curb prices comes from expenditure considerations. The aim of price regulation is to obtain a more equitable allocation of the value of an innovative drug between industries and patients (by reducing prices to make drugs more affordable), but it may also reduce access. (In the listing process, the industry may find it more convenient to limit commercialisation to profitable subgroups of patients.) Furthermore, with the advent of personalised medicine, there is another important dimension that has to be considered, namely, incentives to invest in drug personalisation. In this paper, we review and discuss the impact of different pricing rules on the expenditure and availability of new drugs.
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