How Evolving Market Structures Affect Innovation & Drug Prices in the Pharmaceutical Industry

The project will address, through literature review and theoretical interpretation, whether consolidation in the pharmaceutical industry is problematic from an innovation or competition standpoint. The project will consider 1) how consolidation in the industry among different types of firms affects market structure and financial incentives in the supply chain and thereby influences drug costs, and 2) whether the Hirschman-Herfindahl Index (HHI) is an appropriate measure for the pharmaceutical industry due to the segmentation of the markets and the interaction of various intellectual property rights and regulations. The project will utilize an exhaustive literature review of academic sources, grey literature, government reports, industry analyses, pipeline assessments, manufacturers’ annual statements, and more in order to develop a theoretical framework to assess the state of competition and develop policy solutions.