file http://www.ep.liu.se/exjobb/eki/2004/iep/035/exjobb.pdf.
Are legislators able to meet efficiency goals? – an analysis of the pharmaceutical industry

Author: Suzanna Zeitoun - Supervisor: Göran Skogh

Abstract

During the last decades, legislators have tried to meet the goal of increased R&D in the pharmaceutical industry through an extension of the patent length. In parallel, an attempt to minimise ex post social costs has been made through the introduction of a shortened drug approval process for generic drugs as well as a so-called Bolar provision, giving generic producers earlier access to patented information. However, one can ask how efficient a patent extension possibility has been to meet the goal of increased R&D. Correspondingly, what effects on social costs can we expect from the introduction of an abbreviated approval process and the Bolar provision? These are questions that are dealt with in this thesis. I argue that the impact of the legislative changes have led to a decrease of ex post social cost. However, I will also show that this has lead to a detriment of  ex ante R&D incentives and therefore a negative result on social welfare.