43 Pages Posted: 18 May 2011
Date Written: April 29, 2011
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
JEL Classification: I10, L10, O30
Suggested Citation: 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: https://ssrn.com/abstract=1837311