Pharmaceutical Price Regulation ─ Public Perception, Economic Realities, and Empirical Evidence

Breakthrough drugs have saved millions of lives and improved the health of countless people around the world. Unfortunately, they are also expensive, leading many political leaders to call for price controls, importation, or other procedures to reduce their cost. In Pharmaceutical Price Regulation: Public Perceptions, Economic Realities, and Empirical Evidence, John A. Vernon and Joseph H. Golec argue that price controls and other cost-limiting measures will starve pharmaceutical companies of the R&D money required to develop new drugs. A drug can cost $1 billion or more before it ever appears in the marketplace-and only three out of every ten new drugs ever recoup their development costs. This groundbreaking monograph demonstrates empirically how the free-market system of drug pricing is vital to the development of new breakthrough drugs.

John A. Vernon is a professor in the Department of Health Policy and Management at the University of North Carolina at Chapel Hill, where he also holds appointments at the Kenan-Flagler Business School and the School of Pharmacy. He is a faculty research fellow with the National Bureau of Economic Research. Joseph H. Golec is an associate professor in the Department of Finance at the University of Connecticut.