UBC Faculty Research and Publications

Incentives for valued innovation in the pharmaceutical sector : issues for consideration by domestic and international policy makers Morgan, Steve; Greyson, Devon; Hanley, Gillian; Kinney, Elizabeth


This paper provides a brief review of the economics of information and patents and an explanation of how several characteristics of the pharmaceutical market may produce suboptimal incentives for innovation. We discuss how certain pharmaceutical pricing and reimbursement policies (taken by both state and private actors) may not only be necessary for efficient pharmaceutical purchases, but may also help ensure that patents provide appropriate economic incentives for future innovation. We conclude with an examination of methods by which innovation is measured and argue that the unique characteristics of the pharmaceutical industry may justify changes in both how we measure innovation and how we reward it.

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