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  3. Journal of Economic Literature
  4. June 2018
  5. Economics of the Pharmaceutical Industry

Economics of the Pharmaceutical Industry

  • Darius N. Lakdawalla
Journal of Economic Literature
vol. 56, no. 2, June 2018
(pp. 397-449)
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Abstract

The pharmaceutical industry accounts for a substantial chunk of the US economy's research and development investments, which have resulted in significant medical breakthroughs. At the same time, the costs of pharmaceutical products continue to rise, as does pressure to adopt direct or indirect controls on pharmaceutical prices. We review the economics literature on the pharmaceutical industry, focusing particularly on its positive and normative implications for the innovation, pricing, and marketing decisions of pharmaceutical firms. We discuss the major achievements of, and persistent gaps in, the literature, along with lessons for policy.

Citation

Lakdawalla, Darius N. 2018. "Economics of the Pharmaceutical Industry." Journal of Economic Literature, 56 (2): 397-449. DOI: 10.1257/jel.20161327

Additional Materials

JEL Classification

  • I11 Analysis of Health Care Markets
  • L11 Production, Pricing, and Market Structure; Size Distribution of Firms
  • L65 Chemicals; Rubber; Drugs; Biotechnology; Plastics
  • M31 Marketing
  • M37 Advertising
  • O31 Innovation and Invention: Processes and Incentives
  • O34 Intellectual Property and Intellectual Capital