Public policy and innovation in pharmaceuticals and biotechnology

From an economic standpoint, the process of discovering and developing new drugs has become a long and costly investment activity subject to high levels of uncertainty. Given this economic situation, the long-term incentives to invest in pharmaceutical research and development are especially sensitive to several government policies. This paper examines how public policies such as biomedical research support, the approval of new drugs, intellectual property right protection and pricing and reimbursement controls influence the incentives for drug innovation.