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Is It Possible to Have Cheaper Drugs and Preserve the Incentive to Innovate: Reforming the Drug Approval Process According to Market Principles

Corinne Sauer and Robert Sauer
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Corinne Sauer: Jerusalem Institute for Market Studies

No 5, Working Papers from Jerusalem Institute for Market Studies (JIMS)

Abstract: This paper argues that drugs are expensive not because of a lack of competition among research-based pharmaceutical companies, but because of a lack of competition in the drug approval process. Lack of competition in the drug approval process has led to exceedingly high drug development costs. High drug development costs combined with artificially low drug prices, obtained through price control legislation and legislation that eases the entry of generic products into the market, has caused lower levels of pharmaceutical research and development, innovation, and economic growth.

Keywords: Privatization; Competition; Monopoly; Innovation; Drugs; Generics; Pharmaceuticals (search for similar items in EconPapers)
JEL-codes: D42 D73 D92 F02 G38 H11 I11 I18 K23 L11 O31 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2005-06
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Published in Journal of Technology Transfer, 2007, 32(5), pages 509-524.

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