Economics Research Seminar: Public Contributions to R&D in Pharmaceutical Pricing Policy
About this seminar
This seminar explores how public funding of pharmaceutical research can be better reflected in pricing decisions to improve access and long-term innovation outcomes.
Speaker
Dr Andrea Salas Ortiz, Research Fellow, Centre for Health Economics, University of York
Abstract
Pharmaceutical pricing debates focus on the trade-off between ensuring affordable access to existing medicines (static efficiency) and maintaining incentives for future drug development (dynamic efficiency). While pull incentives are well studied, the role of push incentives—such as public investment in R&D—has received less attention. Ignoring this contribution risks society “paying twice” for innovation: first through public funding of research and then through high prices for patented medicines. This paper develops a quantitative framework to optimise the balance between three policy levers: the share of value paid to manufacturers, the level of public R&D investment, and the extent of any clawback of public funds. Using parameters from the literature and numerical optimisation, the results suggest that increasing public R&D can improve overall population health, and that clawbacks are generally not optimal unless manufacturer payments are already excessively high.
Attendance
This seminar is open to current students and staff at Newcastle University. Registration is required.