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The Impact of Price Regulation on the Launch Delay of New Drugs – A Study of Twenty- Five Major Markets in the Late 1990s

By Patricia M. Danzon, Y. Richard Wang and Liang Wang


Question: This study analyzes the effect of pharmaceutical price regulation on the launch of new drugs. Obtaining regulatory approval for a price may entail administrative delay. In addition, since a low price in one market may “spill-over ” to other markets, through parallel trade and external referencing, manufacturers may rationally prefer longer delay or non-launch of drugs to accepting a relatively low price, particularly for high-volume drugs that would be targets for parallel trade. However, the manufacturer’s opportunity cost of launch delay is greater, the larger the drug’s potential sales. We use IMS data to examine the effects of expected price, expected market size, country indicators, and other factors on new drug launch. Data/Methods: To focus on drugs with potentially global markets, we limit the sample to new chemica

Year: 2011
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