Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments September 22, 2021 erstellt
Beschreibung:
Problem definition: Adaptive approval is a novel regulatory program that enables earlier patient access to new drugs for rare diseases. The program has been in place for almost a decade, however, industry participation has been surprisingly low. Academic/Practical Relevance: The main purpose of our paper is to understand why industry participation has been low, and how the program could be changed to likely increase industry participation and improve patients' welfare. Our results inform healthcare policymakers on ways to redesign adaptive approval programs such that both firm participation and patients' access to new drugs will increase.Methodology: We present a Stackelberg game-theoretic model that captures the strategic interactions between a profit-maximizing pharmaceutical firm and utility-maximizing patients. We analyze various redesigns of the adaptive approval programs, such as the inclusion of subsidies, a change in the market exit requirement, and an extension of the market exclusivity period. Results: We identify requisite program conditions (price, subsidies, exit requirements and exclusivity rights) under which a firm pursues adaptive approval rather than regular approval. To this end, we also determine the optimal R&D effort needed to prevent delays to full market approval, and the optimal unit selling prices. Managerial Implications: Our results explain current industry concerns, and reveal that it is not beneficial for pharmaceutical firms to pursue adaptive approval under the base program conditions. Moreover, we show that subsidy programs are not sufficient to increase participation in adaptive approval programs. By lifting the mandatory exit requirement, we find that regulators can increase participation in adaptive approval programs, but there is a risk that the firms use adaptive approval as a ``rescue" option and will not pursue full market authorization. Finally, we find that extending the market exclusivity period to compensate for the small market size under restricted market access, increases participation in adaptive approval programs