The Pharmaceutical Industry
Understanding the pharmaceutical industry is a complex mission, requiring a thorough understanding not only of the firms that produce drugs but also of the decision-making process involved in drug selection for patients, the role of insurance and other third-party payers, and the substantial role of government in monitoring and regulating many aspects of the marketplace for pharmaceuticals. This chapter provides an overview of the pharmaceutical industry, including the market structure, the stages of research and development (R&D) and the associated costs, the role of government regulation in R&D and approval, and the role of product liability in the research process. It notes the important distinction between basic research and applied research, and explains the roles of the private and public sectors in each. The chapter ends with a discussion of the development of pharmaceuticals for poor countries.