The Economics of the Biopharmaceutical Industry

Patricia M. Danzon

in The Oxford Handbook of Health Economics

Published in print April 2011 | ISBN: 9780199238828
Published online September 2012 | | DOI:

Series: Oxford Handbooks in Economics

The Economics of the Biopharmaceutical Industry

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  • Economics
  • Health, Education, and Welfare
  • Public Economics



This article summarizes the literature, and considers the issue of paying for research and development. It reviews research and development costs, regulation, productivity and incentives for innovation. It discusses market demand and pricing, effects of insurance, reimbursement regulation, alternatives to patents, and generics. Further, it reviews trends in promotion, regulation of promotion and its effects. It discusses global issues, including differential pricing and R&D for neglected diseases. The focus is on the US, as the home of the largest number of multinational pharmaceutical and smaller biotech companies. This article notes the important differences in regulatory and reimbursement systems in other countries. Finally it suggests that although there is large and growing literature on the pharmaceutical industry that has produced valuable information, important issues remain for future research.

Keywords: research and development; generics; pharmaceutical; reimbursement; productivity

Article.  16293 words. 

Subjects: Economics ; Health, Education, and Welfare ; Public Economics

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