Empirical Economics

, Volume 49, Issue 3, pp 1101–1121 | Cite as

Regulation effects on the adoption of new medicines

  • Joan Costa-FontEmail author
  • Alistair McGuire
  • Nebibe Varol


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.


Pharmaceutical innovation Medicines adoption Regulation  Duration analysis 

JEL Classification




We are grateful for the financial support provided by Merck Foundation Trust, and to Tim Williams and Elizabeth Finch from Merck Sharp Dome, UK for their help during the data collection process.

Conflict of interest

No potential conflict of interest.


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Copyright information

© Springer-Verlag Berlin Heidelberg 2015

Authors and Affiliations

  • Joan Costa-Font
    • 1
    Email author
  • Alistair McGuire
    • 1
  • Nebibe Varol
    • 1
  1. 1.London School of Economics and Political Science (LSE)LondonUK

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