Unpacking the Effects of Adverse Regulatory Events: Evidence from 
Pharmaceutical Relabeling

Higgins, Matthew John; Yan, Xin; Chatterjee, Chirantan

doi:10.1016/j.respol.2020.104126

Item

ITEM ACTIONSEXPORT

Add to Basket

Local TagsRelease HistoryDetailsSummary

Released

Journal Article

Unpacking the Effects of Adverse Regulatory Events: Evidence from Pharmaceutical Relabeling

MPS-Authors

/persons/resource/persons231728

Higgins, Matthew John
MPI for Innovation and Competition, Max Planck Society;

External Resource

https://www.nber.org/papers/w24957
(Preprint)

Fulltext (restricted access)

There are currently no full texts shared for your IP range.

Fulltext (public)

There are no public fulltexts stored in PuRe

Supplementary Material (public)

There is no public supplementary material available

Citation

Higgins, M. J., Yan, X., & Chatterjee, C. (2021). Unpacking the Effects of Adverse Regulatory Events: Evidence from Pharmaceutical Relabeling. Research Policy, 50(1): 104126. doi:10.1016/j.respol.2020.104126.

Cite as: https://hdl.handle.net/21.11116/0000-0007-B788-1

Abstract

We provide causal evidence that regulation induced product shocks significantly impact aggregate demand and firm performance in pharmaceutical markets. Event study results suggest an average loss between $569 million and $882 million. Affected products lose, on average, $186 million over their remaining effective patent life. This leaves a loss of between $383 million and $696 million attributable to declines in future innovation. Our findings complement research that shows drugs receiving expedited review are more likely to suffer from regulation induced product shocks. Thus, it appears we may be trading off quicker access to drugs today for less innovation tomorrow. Results remain robust to variation across types of relabeling, market sizes, and levels of competition.