The Impact of Price Regulation on the Launch Delay of New Drugs - Evidence from Twenty-Five Major Markets in the 1990s

42 Pages Posted: 8 Aug 2003 Last revised: 4 Nov 2010

See all articles by Patricia M. Danzon

Patricia M. Danzon

University of Pennsylvania - Health Care Systems Department; National Bureau of Economic Research (NBER)

Y. Richard Wang

AstraZeneca Pharmaceuticals - Public Policy Department

Liang Leon Wang

University of Pennsylvania - Statistics Department

Date Written: July 2003

Abstract

This study analyzes the effect of pharmaceutical price regulation on delays in new drug launches. Because low price in one market may 'spill-over' to others, though parallel trade and external referencing, manufacturers may rationally prefer longer delay or non-launch to accepting a low price. We use a Cox proportional hazard model to analyze the launch experience in 25 major markets of 85 new chemical entities (NCEs) launched in the UK or US between 1994 and 1998. There are 1,167 observed launches, or about 55% of the maximum. The US leads with 73 launches, followed by Germany (66) and the UK (64). Only 13 NCEs launched in Japan, 26 in Portugal and 28 in New Zealand. Countries with fewer launches also have longer average launch lags. The launch hazard is positively related to expected price and to expected volume, controlling for income per capita. The originator firm(s) characteristics, specifically, launch in home country and global experience, also significantly reduce launch delay. Within the EU, likely parallel export countries have the most negative effects. Our results suggest that countries with lower expected prices or smaller expected market size experience longer delays in new drug access, controlling for per capita income and other country and firm characteristics.

Suggested Citation

Danzon, Patricia M. and Wang, Y. Richard and Wang, Liang Leon, The Impact of Price Regulation on the Launch Delay of New Drugs - Evidence from Twenty-Five Major Markets in the 1990s (July 2003). NBER Working Paper No. w9874. Available at SSRN: https://ssrn.com/abstract=428368

Patricia M. Danzon (Contact Author)

University of Pennsylvania - Health Care Systems Department ( email )

3641 Locust Walk
Colonial Penn Center
Philadelphia, PA 19104-6358
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Y. Richard Wang

AstraZeneca Pharmaceuticals - Public Policy Department

1800 Concord Pike
Wilmington, DE 19850
United States

Liang Leon Wang

University of Pennsylvania - Statistics Department ( email )

Wharton School
400 John M. Huntsman Hall
Philadelphia, PA 19104
United States
215-898-1249 (Phone)

HOME PAGE: http://www-stat.wharton.upenn.edu/~wanglian

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