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Do cost-sharing and entry deregulation curb pharmaceutical innovation?

Volker Grossmann ()

Journal of Health Economics, 2013, vol. 32, issue 5, 881-894

Abstract: This paper examines the role of both cost-sharing schemes in health insurance systems and the regulation of entry into the pharmaceutical sector for pharmaceutical R&D expenditure and drug prices. The analysis suggests that both an increase in the coinsurance rate and stricter price regulations adversely affect R&D spending in the pharmaceutical sector. In contrast, entry deregulation may lead to higher R&D spending of pharmaceutical companies. The relationship between R&D spending per firm and the number of firms may be hump-shaped. In this case, the number of rivals which maximizes R&D expenditure per firm is decreasing in the coinsurance rate and increasing in labor productivity.

Keywords: Cost-sharing; Entry deregulation; Health insurance; Patent breadth; Pharmaceutical innovation (search for similar items in EconPapers)
JEL-codes: I10 L10 O30 (search for similar items in EconPapers)
Date: 2013
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Working Paper: Do Cost-sharing and Entry Deregulation Curb Pharmaceutical Innovation? (2011) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:32:y:2013:i:5:p:881-894

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