Comparative Effectiveness Regulations and Pharmaceutical Innovation

John Vernon (), Joseph Golec and J. Stevens

PharmacoEconomics, 2010, vol. 28, issue 10, 877-887

Abstract: As healthcare reform evolves and takes shape, comparative effectiveness research (CER) appears to be one of the central topics on the national healthcare agenda. Over the past couple of years, comparative effectiveness has been explicitly incorporated in more than ten bills. For example, the passage of the American Recovery and Reinvestment Act of 2009 authorized $US1.1 billion for CER. Comparative effectiveness, when costs are formally considered, offers the hope of efficient resource allocation within US healthcare markets. However, the future operationalization and implementation of comparative effectiveness is uncertain, and there exist potentially negative, and unintended, consequences under certain scenarios. One example, and the focus of this article, is pharmaceutical innovation. Incentives for pharmaceutical R&D could be affected if drug development costs increase as a result of firms having to bear, directly or indirectly, the costs of running larger, randomized, head-to-head comparative effectiveness trials. While this may or may not be the case with current and future comparative effectiveness legislation and its subsequent implementation, the potential consequences for pharmaceutical innovation warrant recognition. This is the purpose of the article. To achieve this goal, we develop several models of clinical trial design, drug development costs and R&D investment. By example, we shed light on the causal links between the models and the ways in which industry R&D investment can be affected. Copyright Adis Data Information BV 2010

Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.2165/11537570-000000000-00000 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:pharme:v:28:y:2010:i:10:p:877-887

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/40273

DOI: 10.2165/11537570-000000000-00000

Access Statistics for this article

PharmacoEconomics is currently edited by Timothy Wrightson and Christopher I. Carswell

More articles in PharmacoEconomics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().