Market incentives and pharmaceutical innovation

Wesley Yin

Journal of Health Economics, 2008, vol. 27, issue 4, 1060-1077

Abstract: I study the impact of the Orphan Drug Act (ODA), which established tax incentives for rare disease drug development. I examine the flow of new clinical drug trials for a large set of rare diseases. Among more prevalent rare diseases, the ODA led to a significant and sustained increase in new trials. The impact for less prevalent rare diseases was limited to an increase in the stock of drugs. Tax credits can stimulate R&D; yet because they leave revenue margins unaffected, tax credits appear to have a more limited impact on private innovation in markets with smaller revenue potential.

Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:27:y:2008:i:4:p:1060-1077

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