79076 - Economics of the Biopharmaceutical Industry

Course Unit Page


This teaching activity contributes to the achievement of the Sustainable Development Goals of the UN 2030 Agenda.

Good health and well-being

Academic Year 2022/2023

Learning outcomes

The course aims at providing student with an advanced knowledge on the economics & regulation of the biopharmaceuticals market. Biopharmaceutical markets are regulated in most countries. The objective of regulation is to assure consumers that the inputs into the health production function are of sufficiently high quality, and are made available at reasonable social costs. Regulation typically consists of some combination of different tools like regulation of market access and product safety, patent protection, pricing regulation and regulation of promotion. At the end of the course the student is aware of: • Technological characteristics of the pharmaceutical sector and the objectives of regulation. • Pharmaceuticals' R&D and productivity • The economics of pharmaceutical patenting: patent extension policy, generic entry, extension of patent to developing countries. • Regulation of pricing and profitability. • Regulation of pharmaceutical promotion and DTCA.

Course contents

  • Key facts and rationale for regulation in the pharmaceutical sector
  • R&D and incentive to innovation
  • The rationale for pharmaceutical patenting
  • Demand elasticity, formulary and the buyer power
  • Generics competition
  • Uniform pricing vs price discrimination
  • Models of pricing&reimbursement
  • Issues for developing countries


Key readings

  • Bhattacharya J, Hyde T and Tu P, 2014, Chapter 12 “Pharmaceuticals and the economics of innovation” in Health Economics, Palgrave McMillan.
  • Lakdawalla D, 2018, “Economics of the Pharmaceutical Industry”, Journal of Economic Literature, 56(2), 397 – 449.
  • Sloan FA and Hsieh C-R, 2012, Health Economics, MIT Press, Cambridge, Massachussets, chapter 9
  • Scott Morton and Kyle, 2012, "Markets for Pharmaceutical Products", in Pauly, Mcguire and Barros (eds), Handbook of Health Economics, Volume 2, Elsevier.


  • Danzon P and Nicholson S, 2012, The Oxford Handbook of the Economics of Biopharmaceutical Industry, Oxford University Press (DN)

Additional reading will be given during the course from the following: Journal of Health Economics, Journal of Economic Perspectives, New England Journal of Medicine, Health Affairs, ....

Teaching methods

Lectures, seminars and class discussions.

Assessment methods

The overall assessment consists of:
A) an ESSAY on an assigned topic
B) a computer-based WRITTEN EXAM (60 minutes)
The final grade weights A and B according to 35% and 65% respectively.
A) will be determined by the end of the classes. Retake might affect your final grade only via B).

Essay is a teamwork. Students will be sorted into teams. Each team will be assigned a topic + a couple of “papers to start”. In one week, the team should draft an essay approximately 3.500 words long, frontpage and references excluded. Each team must send its essay to the professor by e-mail within 1 week after assignment.

The computer-based written exam will be closed-book and administerd online. You will have 60 minutes to complete. Details (and a simulation) will be provided in the class.


Grades are expressed on a 18-30 scale and graduated as follows:

<18 failed
18-23 sufficient
24-27 good
28-30 very good
30 L excellent

Further details on the assessment metods and grading will be provided at the beginning of the classes.

Teaching tools

We will use Unibo e-learning platform (VIRTUALE.UNIBO.IT) for remote downloading of teaching materials and uploading of assigned teamworks.

Details on how to access the remote learning platform will be provided at the beginning of the course.

Links to further information


Office hours

See the website of Daniele Fabbri