Academic Literature

Understanding the Rewards of Successful Drug Development: Thinking Inside the Box

The ability to charge high prices is only one component of a complex system of risks and rewards that underlies pharmaceutical innovation.

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Originally published on 01/30/2020 in The New England Journal of Medicine

Current healthcare policy is focused on lowering drug prices. However, the ability to charge high prices is only one component of a complex system of risks and rewards that underlies pharmaceutical innovation in the US.

Policymakers who contemplate the system as a whole may create space for additional policy levers for change, since it is this overall framework that dictates the incentives for new drug development. In this paper, we introduce the idea of an "reward box" to summarize the financial returns across the phases of drug discovery, approval, and sales. The objective of this is to show how the drug development and sale periods interact to produce the overall reward.

Read the full article and see the interactive "reward box" graphic here.

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