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Reexamining Drug Regulation from the Perspective of Innovation Policy

Rebecca S. Eisenberg
Journal of Institutional and Theoretical Economics (JITE) / Zeitschrift für die gesamte Staatswissenschaft
Vol. 160, No. 1, 21st International Seminar on the New Institutional Economics - The Generation and Distribution of Knowledge (March 2004), pp. 126-135
Stable URL: http://www.jstor.org/stable/40752445
Page Count: 10
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Reexamining Drug Regulation from the Perspective of Innovation Policy
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Abstract

The patent system typically takes credit for motivating biopharmaceutical innovation by making it profitable, while drug regulation gets blamed for burdening innovation with bureaucratic costs and delays. But FDA regulation in fact promotes profitability by prolonging exclusivity in product markets and by protecting against parallel imports. Firms may prefer FDA-administered exclusivities to expanded patent protection because they protect product markets without also adding to R& D costs. FDA-administered exclusivities may also face fewer legal and political obstacles than expanded patent protection, although as pressure mounts to constrain the rising costs of drugs, the political environment is changing.

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