Impact of R&D Expenditure on Pharmaceutical Drug Prices: A Cross-Country Comparison

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Description
Over the past few decades, pharmaceutical spending has been increasing, due in large part to high prices of prescription drugs. In the United States, pharmaceutical manufacturers defend high prices by citing the high costs of research and development, which they

Over the past few decades, pharmaceutical spending has been increasing, due in large part to high prices of prescription drugs. In the United States, pharmaceutical manufacturers defend high prices by citing the high costs of research and development, which they argue spurns innovation and makes up for the high prices paid by consumers. This study seeks to determine the validity of that claim and to fully understand the impact that R&D expenditures have on pharmaceutical drug prices. Employing a fixed effects regression, this study assesses the relationship between per capita R&D expenditure and per capita pharmaceutical spending (a stand-in variable for average drug price) for twelve OECD-member countries over a span of seven years. Holding country and year effects fixed, this regression shows a nearly one to one positive relationship between R&D expenditure and pharmaceutical spending, meaning a one-dollar increase in R&D expenditure increases pharmaceutical spending by around one-dollar as well. This impact, while statistically significant, is not that large, implying that R&D expenditures are not a strong driver of drug prices, contrary to what many pharmaceutical manufacturers argue.
Date Created
2018-05
Agent

Understanding Why Utilities Are Moving Towards Residential Demand Pricing and Analyzing Effectiveness in Methods of Communication

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Description
An increasing amount of utilities are moving towards residential demand pricing, causing much controversy and miscommunication between the provider and the consumer as to what demand pricing is, and what it entails for the consumer. This paper will analyze the

An increasing amount of utilities are moving towards residential demand pricing, causing much controversy and miscommunication between the provider and the consumer as to what demand pricing is, and what it entails for the consumer. This paper will analyze the effectiveness of utility-consumer communication methods and how Arizona utility companies (Salt River Project and Arizona Public Service) have migrated the obstacles of TOU (Time of Use) pricing changes to Arizona utility residents, especially to solar customers. SRP (Salt River Project) and APS (Arizona Public Service) have both implemented pilot programs including the E-27 for SRP and the Saver Choice Plus plan for APS . Both programs, along with international programs, have seen varying levels of success for their business and for consumers to grasp peak-demand pricing and usage. Overall, APS customers have seen an average increase of 4.5% on their electricity bills while SRP customers have experienced, on average, a $19.00 increase. Despite these bill increases, both utilities have seen a decrease in customer electricity demand in response to higher energy costs during peak times.
Date Created
2018-05
Agent