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The Effects of UK Pharmaceutical Policy on Government Drug Expenditure: Cost Control and Incentives for R&D

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  • Mary K. Olson

Abstract

This paper investigates the impact of UK pharmaceutical policy on the level of NHS pharmaceutical expenditure. UK pharmaceutical policy is one which has managed to control costs, but at the same time, has not sacrificed the rewards for conducting long-term R&D in the UK. The analysis provides evidence that the government policies which encourage long-term R&D and the development of new drugs actually lead to lower overall pharmaceutical expenditure by the NHS. The reason for this is attributed to the savings associated with the replacement of new drugs for other less effective drugs. Additional results show that the UK receives positive spillovers from the R&D conducted by US firms and this R&D has a cost reducing impact on NHS pharmaceutical expenditure.

Suggested Citation

  • Mary K. Olson, 1995. "The Effects of UK Pharmaceutical Policy on Government Drug Expenditure: Cost Control and Incentives for R&D," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 2(1), pages 51-64.
    • Handle: RePEc:taf:ijecbs:v:2:y:1995:i:1:p:51-64
    DOI: 10.1080/758521096
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    Cited by:

    1. Patrizio Armeni & Claudio Jommi & Monica Otto, 2016. "The simultaneous effects of pharmaceutical policies from payers’ and patients’ perspectives: Italy as a case study," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(8), pages 963-977, November.

    More about this item

    Keywords

    UK pharmaceutical policy; R&D NHS drug expenditure; JEL classifications: L51;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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