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| Publications [#238158] of Henry G. Grabowski
Journal Articles
- Grabowski, HG, Are the Economics of Pharmaceutical R&D Changing? Productivity, Patents and Political Pressures,
PharmacoEconomics, vol. 22, suppl. 2
(2004),
pp. 15-24 [repository]
(last updated on 2024/04/23)
Abstract:
Pharmaceutical R&D competition in the 1980s
and 1990s was
characterized by rising R&D expenditures,
favorable returns
to innovators, and the introduction of many
new classes of
drugs with high social benefits. However
in the past
three years the number of new drug
introductions has been
below the historical trend, while costs per
new drug
continue to increase.
Another important concern affecting the
industry is the
fact that many leading drugs under patent are
being
challenged by generic firms. Under the 1984
Hatch-Waxman
Act, generic firms have strong incentives to
be the first
to challenge a patent given the 180 day
exclusivity
provision. Many generic firms have developed
a business
model which involves prospecting in patent suit
challenges. Congress is currently
considering legislative
changes to the 1984 Act, but is not
addressing this
important issue.
Looking forward, a key issue will be how the
pending
Medicare Rx drug benefit is implemented.
Initially
Congress is likely to structure the Medicare
benefit using
traditional PBM and managed care competition
to keep costs
in check. However, Medicaid programs
recently have become
more aggressive in their cost containment
programs. Many
states have adopted preferred drug lists with
prior
authorization and thirteen states now have
quantity limits
on the number of prescriptions per month.
Over time
Medicare will likely confront similar
budgetary problem to
the states’ and experience pressures to
expand the scope of
the program. A long term dynamic toward more
aggressive
cost containment would have particularly adverse
consequences for innovation.
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