ArticleApplied health economics and health policy2021
Revisiting the Relationship Between Price Regulation and Pharmaceutical R&D Investment.
Article in Applied health economics and health policy, 2021. The graph could read no effect estimate from its abstract, so it casts no vote on the map. Cited by 10 papers.
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Who cites it
10 citing papers in PubMed.
- Affordable Prices Without Threatening the Oncological R&D Pipeline-An Economic Experiment on Transparency in Price Negotiations.Cancer research communications · 2022Trial
- The impact of the United States most favored nation policies on prices of branded medicines and research and development.Health policy OPEN · 2026Review
- The Washington State Prescription Drug Affordability Board's selection of drugs for affordability review.Journal of managed care & specialty pharmacy · 2026Article
- Strategic resource allocation: an agent-based model of ambidextrous strategies in the pharmaceutical industry.Cost effectiveness and resource allocation : C/E · 2026Article
- Understanding biopharmaceutical investment decision-making: how does Congressional Budget Office's model compare to investor insights?Health affairs scholar · 2025Article
- Use of Clinical Trial Characteristics to Estimate Costs of New Drug Development.JAMA network open · 2025Article
- Article
- Pharmaceutical pricing in Europe: time to take the right direction.Internal and emergency medicine · 2022Article
- Public health policies for the common interest: rethinking EU states' incentives strategies when a pandemic reshuffles all interests.The European journal of health economics : HEPAC : health economics in prevention and care · 2022Article
- How Risky Is That Risk Sharing Agreement? Mean-Variance Tradeoffs and Unintended Consequences of Six Common Risk Sharing Agreements.MDM policy & practiceArticle
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Authors and funding
3 authors.
Funding
No grant is acknowledged in the PubMed record.
Abstract
backgroundA trade-off exists between affordability of pharmaceutical products today and incentives for firms to provide new and better drugs in the future; an activity that prior studies suggest correlates with profitability, which in turn depends on price regulation.
objectiveIn this paper we re-examined the relationship between price regulation and pharmaceutical research and development (R&D) intensity, and explored the role of profitability and cash flow in mediating this relation using the latest available data from 2000 to 2017 for the 10 most innovative pharmaceutical companies.
methodsFollowing a framework similar to a previous study, we exploited stylized facts about sales volumes in Europe and USA, which give rise to variation in exposure to price regulation. Using ordinary least squares fixed effects models, we assess whether price regulation is related to R&D investment through cash flow effects and profitability.
resultsWhile exposure to price regulation (measured by relative market share in EU/USA) is related negatively to R&D intensity, and this result is driven by price regulation being negatively related to cash flow and profitability, the results were not significant when firm fixed effects were added to the regression models. Modeling firm dynamics showed that cash flow and profitability of European- and US-based firms responded differently to exposure to price regulation. Thus, firm specific effects play an important role in explaining the negative relationship between price regulation and R&D intensity. These results were robust to the inclusion of different time-varying firm level variables.
conclusionThe findings suggest that investment decisions of firms are most likely driven by long-run inter-firm differences, and that firm effects strongly determine firm strategies in terms of R&D investment.
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