Abstract

http://ssrn.com/abstract=1837311
 
 

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Do Cost-Sharing and Entry Deregulation Curb Pharmaceutical Innovation?


Volker Grossmann


University of Fribourg - Faculty of Economics and Social Science; Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute)

April 29, 2011

CESifo Working Paper Series No. 3439

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.

Number of Pages in PDF File: 43

Keywords: aggregate productivity, cost-sharing, entry deregulation, health insurance, pharmaceutical innovation

JEL Classification: I10, L10, O30

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Date posted: May 18, 2011  

Suggested Citation

Grossmann, Volker, Do Cost-Sharing and Entry Deregulation Curb Pharmaceutical Innovation? (April 29, 2011). CESifo Working Paper Series No. 3439. Available at SSRN: http://ssrn.com/abstract=1837311

Contact Information

Volker Grossmann (Contact Author)
University of Fribourg (Switzerland) - Faculty of Economics and Social Science ( email )
Fribourg, CH 1700
Switzerland
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
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