Manufacturing, Supply and Pricing of Pharmaceuticals: Lessons from Biologically-Derived Products

Abstract

Societal benefits of improving the efficiency of manufacturing biologics can be large given static impacts on product supply, availability and prices as well as dynamic impacts on future product R&D. This paper examines the static impacts of manufacturing process innovations using a dataset of biologically-derived pharmaceutical products: penicillins, hepatitis B vaccines, measles-mumps-rubellla vaccines, influenza vaccines and poliomyelitis vaccines. It finds that biologically-derived pharmaceuticals manufactured with cost-reducing process innovations tend to have, on average, a higher product density and lower prices. It did not, however find any strong evidence that products made with cost-reducing process innovations have lower hazards of exit relative to those made with cost-increasing process innovations. The results suggest that investing in bioprocess development (pharmaceutical manufacturing research) may provide a means of avoiding supply shortages and facilitating price competition to support expanded access to and affordability of the current and emerging cohorts of biologics.