Drug Approval Decision Times, International Reference Pricing and Strategic Launches of New Drugs

33 Pages Posted: 10 Oct 2014

See all articles by Nicolas Houy

Nicolas Houy

University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE)

Izabela Jelovac

University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE)

Date Written: October 8, 2014

Abstract

This paper analyzes how drug approval procedures influence the incentives of pharmaceutical firms to launch new drugs in the presence of international reference pricing. First, we show that the set of countries in which a firm commercializes a new drug is larger when countries do not approve this new drug simultaneously. We also show that a firm’s best response to international reference pricing is to never launch a new drug sequentially as long as the difference in drug approval times between countries is small enough. Furthermore, we show that a firm’s incentives to launch a new drug in one or another country are the same if the drug approval times are identical across countries or if the difference between approval times are small enough. However, we show that these incentives can change if the approval times differences across countries are large enough.

Keywords: Drug launch timing, sequential launching, marketing authorization, international reference pricing

JEL Classification: I11, L65

Suggested Citation

Houy, Nicolas and Jelovac, Izabela, Drug Approval Decision Times, International Reference Pricing and Strategic Launches of New Drugs (October 8, 2014). Available at SSRN: https://ssrn.com/abstract=2507201 or http://dx.doi.org/10.2139/ssrn.2507201

Nicolas Houy (Contact Author)

University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE) ( email )

93, chemin des Mouilles
Ecully, 69130
France

Izabela Jelovac

University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE) ( email )

93, chemin des Mouilles
Ecully, 69130
France

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