title: Effects of regulation on drug launch and pricing in interdependent markets.
abstract: OBJECTIVE
  This study examines the effect of price regulation and competition on launch timing and pricing of new drugs.
  
  
  METHODS
  Our data cover launch experience in 15 countries from 1992 to 2003 for drugs in 12 major therapeutic classes. We estimate a two-equation model of launch hazard and launch price of new drugs.
  
  
  RESULTS
  We find that launch timing and prices of new drugs are related to a country's average prices of established products in a class. Thus to the extent that price regulation reduces price levels, such regulation directly contributes to launch delay in the regulating country. Regulation by external referencing, whereby high-price countries reference low-price countries, also has indirect or spillover effects, contributing to launch delay and higher launch prices in low-price referenced countries.
  
  
  CONCLUSIONS
  Referencing policies adopted in high-price countries indirectly impose welfare loss on low-price countries. These findings have implications for US proposals to constrain pharmaceutical prices through external referencing and drug importation.
authors.affiliation: The Wharton School, University of Pennsylvania, Philadelphia, PA, USA.
authors.forename: Patricia M
authors.initials: PM
authors.lastname: Danzon
authors.forename: Andrew J
authors.initials: AJ
authors.lastname: Epstein
mesh_terms: D016208:Databases, Factual; D017277:Drug Approval / Q000331:legislation & jurisprudence*; D016527:Drug Costs / Q000331:legislation & jurisprudence; D004345:Drug Industry; D017850:Economics, Pharmaceutical; D005060:Europe; D006297:Health Services Accessibility; D038622:Internationality; D015233:Models, Statistical; D008962:Models, Theoretical; D004364:Pharmaceutical Preparations / Q000191:economics* / Q000600:supply & distribution; D014481:United States
chemical_list: D004364:Pharmaceutical Preparations