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Do Cost-sharing and Entry Deregulation Curb Pharmaceutical Innovation?

Volker Grossmann ()

No 3439, CESifo Working Paper Series from CESifo Group Munich

Abstract: This paper examines the role of both cost-sharing schemes in health insurance systems and entry regulation for pharmaceutical R&D expenditure, drug prices, aggregate productivity, and income. 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 quality-improvements of pharmaceuticals, despite reducing price-setting power of pharmaceutical companies. Extension to an endogenous growth context suggests that, when individual labor supply depends on health status, both cost-sharing and entry barriers in the pharmaceutical sector also affect aggregate productivity and wage rates.

Keywords: aggregate productivity; cost-sharing; entry deregulation; health insurance; pharmaceutical innovation (search for similar items in EconPapers)
JEL-codes: I10 L10 O30 (search for similar items in EconPapers)
Date: 2011
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Journal Article: Do cost-sharing and entry deregulation curb pharmaceutical innovation? (2013) Downloads
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