Regulation effects on the adoption of new medicines

This paper analyses the impact of reimbursement regulation on launch times in the adoption of new medicines in a sample of OECD countries and a subsample of European countries. The latter also allows examination of price spillover effects, given that pharmaceutical product reimbursement regulation commonly benchmarks from prices in other countries. We empirically focus on the relative delays imposed by regulation on the adoption of a global set of molecules, which have diffused across more than 10 markets in the OECD over the period 1999–2008, controlling for various confounding effects. Through examining time to launch across a number of markets, and controlling for a number of confounding influences, we find that price and reimbursement regulations appear to delay the adoption of new pharmaceutical products. We also find that the existence of interdependencies in pricing may have a further indirect effect of such regulation on launch times. Firm economies of scale, the therapeutic importance of specific product innovations and market size are found to counter the delaying impact of price and reimbursement regulation on new medicines adoption.