Kennedy (2019) reviews the literature supporting the perspective that price controls would imply a reduction of pharmaceutical R&D and hence the stream of new pharmaceutical products that bring great benefits to society. As we explained in Section 4, that perspective and the concern it causes, even in the context of contemplated price controls such as those being considered by Congress in 2019, overlooks a scenario-depicted in Figure 4.2 of Section 4-that can reasonably be expected to characterize R&D for pharmaceutical and other biomedical products. Namely, with R&D rivalry, the private R&D is expected to overshoot the socially optimal amount despite the R&D rivals' incomplete appropriation of the returns for R&D investment.
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