R&D and market size: who benefits from orphan drug regulation?

Since the early 80s, orphan drug regulations have been introduced to stimulate R&D for rare diseases. We develop a theoretical model to study the heterogeneous impact on optimal R&D decisions of the incentives for diseases with different levels of prevalence. We show the mechanisms through which the type of incentives deployed by orphan drug regulations may stimulate R&D more for orphan diseases with comparatively high prevalence, thus increasing inequality within the class of orphan diseases. Using data from the Food and Drug Administration on the number of orphan designations, our empirical analysis shows that, while R&D has increased over time for all orphan diseases, the increase has been much greater for the less rare. According to our baseline specification, the difference between the predicted number of orphan designations for a disease belonging to the highest and the lowest class of prevalence is 5.6 times larger after 2008 than it was in 1983. Our findings support the idea that the type of incentives in place may be responsible for this increase in inequality within orphan diseases

Free-Riding in Pharmaceutical Price Regulation: Theory and Evidence

We present a model of the strategic interaction among authorities regulating pharmaceutical prices in different countries and the R&D investment decisions of pharmaceutical firms. Regulators’ decisions affect consumer surplus directly, via prices, and indirectly via firms’ profits and R&D investment policies, which in turn affect patient health. The positive externality of a price increase in one country provides an incentive for other countries to free-ride, and we show how country-level characteristics affect optimal pricing decisions and equilibria. Our theoretical predictions are tested using price data for a set of 70 cancer drugs in 25 OECD countries. We find evidence of behaviour that is consistent with the free-riding hypothesis and which, in line with the theoretical predictions, differs according to country-level characteristics. Countries with comparatively large market shares tend to react to increases in other countries’ prices by lowering their own prices; in countries with comparatively small market shares, regulators’ decisions are consistent with the objective of introducing the product at as low a price as possible. We discuss the policy implications of our results for incentivising global pharmaceutical R&D and the recent proposal to move towards a joint pharmaceutical procurement process at the European level

R&D and market size: who benefits from orphan drug legislation?

Since the early 80s, incentives have been introduced to stimulate R&D for rare diseases. We develop a theoretical model to study the impact of push and pull incentives on the intensive and extensive margin of optimal R&D investments. The model describes the mechanisms by which the type of incentives provided may favor R&D for orphan diseases with comparatively high prevalence. In our empirical analysis, we merge data on orphan drug designations by the Food and Drug Administration with Orphanet data on disease characteristics. In line with the theoretical results, we find evidence supporting the idea that the incentives adopted may have contributed substantially to widening the gap between more and less rare diseases classified as orphan. Our theoretical and empirical findings together suggest that, if providing some therapeutic option to patients with very rare diseases is a priority, a revision of the current system of incentives should be considered

R&D and market size: who benefits from orphan drug regulation?

Since the early 80s, orphan drug regulations have been introduced to stimulate R&D for rare diseases. We develop a theoretical model to study the heterogeneous impact on optimal R&D decisions of the incentives for diseases with different levels of prevalence. We show the mechanisms through which the type of incentives deployed by orphan drug regulations may stimulate R&D more for orphan diseases with comparatively high prevalence, thus increasing inequality within the class of orphan diseases. Using data from the Food and Drug Administration on the number of orphan designations, our empirical analysis shows that, while R&D has increased over time for all orphan diseases, the increase has been much greater for the less rare. According to our baseline specification, the difference between the predicted number of orphan designations for a disease belonging to the highest and the lowest class of prevalence is 5.6 times larger after 2008 than it was in 1983. Our findings support the idea that the type of incentives in place may be responsible for this increase in inequality within orphan diseases

R&D and market size: who benefits from orphan drug legislation?

Since the early 80s, incentives have been introduced to stimulate R&D for rare diseases. We develop a theoretical model to study the impact of push and pull incentives on the intensive and extensive margin of optimal R&D investments. The model describes the mechanisms by which the type of incentives provided may favor R&D for orphan diseases with comparatively high prevalence. In our empirical analysis, we merge data on orphan drug designations by the Food and Drug Administration with Orphanet data on disease characteristics. In line with the theoretical results, we find evidence supporting the idea that the incentives adopted may have contributed substantially to widening the gap between more and less rare diseases classified as orphan. Our theoretical and empirical findings together suggest that, if providing some therapeutic option to patients with very rare diseases is a priority, a revision of the current system of incentives should be considered

Spillovers of Pharmaceutical Price Regulations: evidence from the AMNOG Reform in Germany

In years of growing pharmaceutical spending, the adoption of new health technologies faces several regulatory hurdles. Such policies are typically studied at the country level, even though there are explicit and implicit channels that link decisions made in different countries. This can be relevant in the EU, where external reference pricing is widely adopted. This work exploits the IMS pricing database of cancer drugs approved by the European Medicine Agency between 2007 and 2017 to assess the impact of a pharmaceutical pricing regulation change that occurred in Germany in 2011 (the AMNOG bill) on foreign pharmaceutical prices. We show that the impact on foreign prices depends on whether the foreign country adopts external reference pricing policies and whether it includes Germany in its basket of reference countries and, symmetrically, if it enters Germany’s reference set. In particular, our diff-in-diff approach shows that AMNOG led to a price reduction for products launched in countries that refer to Germany (indirect spillover effect), whereas products launched in countries referenced by Germany experienced a 5.48% price increase (strategic spillover effect)

The role of oxysterols in vascular aging.

The ageing endothelium progressively loses its remarkable and crucial ability to maintain homeostasis of the vasculature, as it acquires a proinflammatory phenotype. Cellular and structural changes gradually accumulate in the blood vessels, and markedly in artery walls. Most changes in aged arteries are comparable to those occurring during the atherogenic process, the latter being more marked: pro‐oxidant and proinflammatory molecules, mainly deriving from or triggered by oxidized low density lipoproteins (oxLDLs), are undoubtedly a major driving force of this process. Oxysterols, quantitatively relevant components of oxLDLs, are likely candidate molecules in the pathogenesis of vascular ageing, because of their marked pro‐oxidant, proinflammatory and proapoptotic properties. An increasing bulk of experimental data point to the contribution of a variety of oxysterols of pathophysiological interest, also in the age‐related genesis of endothelium dysfunction, intimal thickening due to lipid accumulation, and smooth muscle cell migration and arterial stiffness due to increasing collagen deposition and calcification. This review provides an updated analysis of the molecular mechanisms whereby oxysterols accumulating in the wall of ageing blood vessels may ‘activate’ endothelial and monocytic cells, through expression of an inflammatory phenotype, and ‘convince’ smooth muscle cells to proliferate, migrate and, above all, to act as fibroblast‐like cells. [Image: see text