Jump to ContentJump to Main Navigation
Economic Regulation and Its ReformWhat Have We Learned?$
Users without a subscription are not able to see the full content.

Nancy L. Rose

Print publication date: 2014

Print ISBN-13: 9780226138022

Published to Chicago Scholarship Online: January 2015

DOI: 10.7208/chicago/9780226138169.001.0001

Show Summary Details
Page of

PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 29 July 2021

Regulation of the Pharmaceutical-Biotechnology Industry

Regulation of the Pharmaceutical-Biotechnology Industry

Chapter:
(p.407) 7 Regulation of the Pharmaceutical-Biotechnology Industry
Source:
Economic Regulation and Its Reform
Author(s):

Nancy L. Rose

Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226138169.003.0008

Pharmaceuticals and human biologic products (“pharmaceuticals”) are regulated in virtually all aspects of the product life-cycle: safety, efficacy and manufacturing quality, promotion, and pricing. The rationale for heavy regulation of pharmaceuticals is not intrinsic natural monopoly, since any market power enjoyed by individual products derives ultimately from government-granted patents. Rather, regulation of market access, manufacturing and promotion arise because product efficacy and safety are critical to patient health but not immediately observable. In contrast, price regulation is best understood as a response by public insurers to the fact that insurance makes consumers price insensitive. Although this suggests that regulation of the pharmaceutical industry is potentially welfare enhancing, designing the optimal structure of such regulation is complicated. Market access regulation entails resource costs and foregone patient benefits in terms of fewer drugs and drug launch delays. On the pricing side, regulation should ideally constrain pricing moral hazard while preserving insurance coverage for patients and incentives for research and development (R&D). Designing regulatory structures that are theoretically sound and empirically practical is a theoretical and policy challenge. This chapter describes the pharmaceutical industry and its worldwide regulation. Empirical evidence on various kinds of regulation is described, along with welfare and innovation implications.

Keywords:   pharmaceuticals, regulation, government-granted patents, market access, resource costs, regulatory structure

Chicago Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs, and if you can't find the answer there, please contact us.