22 October 2018 - It is presumed that anticipated regulatory and reimbursement policies are important considerations in the research and development (R&D) decisions of manufacturers of drugs and biologics, and the investors who finance their development. 

A proactive regulatory approval process, including provisions such as priority review and accelerated approval, but also financial regulations concerning tax incentives, induce investment. And, payers play an important role as they account for over 80% of the spending on prescription drugs. Decisions by payers to insure a drug constitute a critical determinant of market access. In turn, this can reach back to impact expected return on investment for developers and investors with respect to drugs in the pipeline.

Conventional wisdom suggests that the relative absence of government-regulated pricing and restrictions on reimbursement creates an environment that is generally conducive to greater R&D expenditure. Without price controls and anticipated reimbursement restrictions, firms are able to invest in drug development with fewer concerns about future market access issues once their product is approved.

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