title: Do cost-sharing and entry deregulation curb pharmaceutical innovation?
abstract: This paper examines the role of both cost-sharing schemes in health insurance systems and the regulation of entry into the pharmaceutical sector for pharmaceutical R&D expenditure and drug prices. The analysis suggests that both an increase in the coinsurance rate and stricter price regulations adversely affect R&D spending in the pharmaceutical sector. In contrast, entry deregulation may lead to higher R&D spending of pharmaceutical companies. The relationship between R&D spending per firm and the number of firms may be hump-shaped. In this case, the number of rivals which maximizes R&D expenditure per firm is decreasing in the coinsurance rate and increasing in labor productivity.
authors.affiliation: University of Fribourg, Switzerland; CESifo, Munich, Germany; Institute for the Study of Labor (IZA), Bonn, Germany. Electronic address: volker.grossmann@unifr.ch.
authors.forename: Volker
authors.initials: V
authors.lastname: Grossmann
mesh_terms: D017047:Cost Sharing; D016527:Drug Costs; D055808:Drug Discovery; D004345:Drug Industry / Q000331:legislation & jurisprudence*; D004335:Drug and Narcotic Control / Q000331:legislation & jurisprudence*; D015233:Models, Statistical; D010330:Patents as Topic; D012106:Research; D014481:United States
keywords: Cost-sharing; Entry deregulation; Health insurance; I10; L10; O30; Patent breadth; Pharmaceutical innovation