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Pharmaceutical R&D lies at the crux of various shaping influences. First, the R&D is difficult to complete with many failures for each success. Second, the regulatory agency imposes minimum requirements in both safety and efficacy that must be met, while passing through a path of tests (of which there are multiple paths available). Third, each approved drug must compete in an imperfect market to meet certain therapeutic needs. Although a given drug may have a period of exclusivity related to its chemical formulation, it may be that it always faces competition from chemically dissimilar compounds. Fifth, entry of competing products is not guaranteed. Finally, the way that pharmaceutical compounds are paid for – involving a mixture of private, insurance, and government funds – makes tracking profit incentives quite difficult.
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Will King
4 years ago