title: Market incentives and pharmaceutical innovation.
abstract: I study the impact of the Orphan Drug Act (ODA), which established tax incentives for rare disease drug development. I examine the flow of new clinical drug trials for a large set of rare diseases. Among more prevalent rare diseases, the ODA led to a significant and sustained increase in new trials. The impact for less prevalent rare diseases was limited to an increase in the stock of drugs. Tax credits can stimulate R & D; yet because they leave revenue margins unaffected, tax credits appear to have a more limited impact on private innovation in markets with smaller revenue potential.
authors.affiliation: University of Chicago, 1155 E. 60th Street, Chicago, IL 60637, United States.
authors.forename: Wesley
authors.initials: W
authors.lastname: Yin
mesh_terms: D004345:Drug Industry / Q000191:economics*; D006291:Health Policy; D009042:Motivation; D009965:Orphan Drug Production / Q000191:economics* / Q000331:legislation & jurisprudence; D012106:Research; D014481:United States