I write about market entry, exit, and pricing, especially for biotechnology and pharmaceuticals. Regarding market entry, I am interested in how to encourage drug developers to enter therapeutic markets that would otherwise be neglected. I write about innovation incentives, including the priority review voucher. Regarding market exit, I write about drug and vaccine shortages. Early in my career, I was also interested in where businesses located. Finally, I am interested in drug pricing, including launch prices and patient prices (copayments).
I was lead author of an article that became law. In 2006 we proposed a priority review voucher program to encourage innovation for neglected diseases(Ridley et al. 2006). We worked with members of the Senate for passage of the voucher law in 2007. The FDA has awarded more than 50 vouchers and vouchers sell for about $100 million each, so we created a multi-billion dollar market and encouraged new drugs that save lives. You can read more about the priority review voucher on Wikipedia or on my voucher page.
- David B. Ridley, Pranav Ganapathy, and Hannah E. Kettler. 2021. “US Tropical Disease Priority Review Vouchers: Lessons in Promoting Drug Development and Access.” Health Affairs, 40(8): 1243-1251.
- David B. Ridley, Jeffrey L. Moe, and Nick Hamon. 2017. “A Voucher System to Speed Review Could Promote a New Generation of Insecticides to Fight Vector-Borne Diseases.” Health Affairs, 36(8): 1461-1468.
- David B. Ridley and Stephane A. Régnier. 2016. “>The Commercial Market for Priority Review Vouchers.” Health Affairs, 35(5): 776-783.
- David B. Ridley, Jennifer Dent, and Christopher Egerton-Warburton. 2016. “Efficacy of the Priority Review Voucher Program.” Journal of the American Medical Association, 315(15): 1659-1660.
- David B. Ridley. 2015. “The Regulatory Burden of the Priority Review Voucher Program.” Health Affairs Forefront.
- Joshua S. Gans and David B. Ridley. 2013. “Innovation Incentives under Transferable Fast-Track Regulatory Review.” Journal of Industrial Economics. Vol. 61, No. 3: 789-816. (Working paper)
- David B. Ridley and Alfonso Calles Sanchez. 2010. “Introduction of European Priority Review Vouchers to Encourage Development of New Medicines for Neglected Diseases.” The Lancet. 376 (9744): 922-927. (Working paper)
- Jeffrey L. Moe, Henry G. Grabowski, and David B. Ridley. 2009. “FDA Review Vouchers.” The New England Journal of Medicine. 360 (8): 837-838.
- David B. Ridley, Henry G. Grabowski, and Jeffrey L. Moe. 2006. “Developing Drugs for Developing Countries.” Health Affairs. 25 (2): 313-324. Appendix (Working paper)
To encourage drug development for neglected diseases, government agencies can provide direct funding of clinical trials. However, some government agencies will free ride, diverting funds to other diseases and purposes. Another way to encourage drug development for neglected diseases is to offer transferable exclusivity vouchers.
- Margaret K. Kyle, David B. Ridley, and Su Zhang. 2017. “Strategic Interaction among Governments in the Provision of a Global Public Good,” Journal of Public Economics, 156: 185–199. Summary
- Beth Boyer, Adam Kroetsch, Andrea Thoumi, and David B. Ridley. 2022. “How to Motivate Drug Development for Infectious Diseases.” Health Affairs Forefront.
- Beth Boyer, Adam Kroetsch, and David B. Ridley. 2022. “Design of a Transferable Exclusivity Voucher Program.” Duke Margolis Center for Health Policy White Paper.
In health care, shortages are surprisingly common. One cause of drug and vaccine shortages is low and inflexible prices. Manufacturers invest little in spare capacity if margins are thin. Rationing has been effective at mitigating the harm from a vaccine shortage, provided that some supply is available from a second manufacturer.
- Abe Dunn, Emily Lawler, Eli Liebman, and David B. Ridley. “Consequences of a Shortage and Rationing: Evidence from a Pediatric Vaccine.” Working paper.
- Ali Yurukoglu, Eli Liebman, and David B. Ridley. 2017. “The Role of Government Reimbursement in Drug Shortages.” American Economic Journal: Economic Policy, 9(2): 348–382. (Working paper)
- David B. Ridley, Xiaoshu Bei, and Eli Liebman. 2016. “No Shot: US Vaccine Prices and Shortages.” Health Affairs, 35(2): 235-241. (Working paper) (Summary in The New York Times)
Government policy influences both drug launch prices and price changes.
- David B. Ridley and Chung-Ying Lee. 2020 “Does Medicare Reimbursement Drive up Drug Launch Prices?” The Review Economics and Statistics. 102(5): 980-993. (Video)
- David B. Ridley and Su Zhang. 2017. “Regulation of Price Increases.” International Journal of Industrial Organization, 50: 186–213. (Working paper)
- Stephane A. Régnier and David B. Ridley. 2015. “Forecasting Market Share in the US Pharmaceutical Market.” Nature Reviews Drug Discovery. 14 (9): 594-595. Supplement. (Working paper)
- David B. Ridley. 2015. “Payments, Promotion, and the Purple Pill.” Health Economics. 24 (1): 86-103. (Working paper)
- Peter Arcidiacono, Paul Ellickson, Peter Landry, and David B. Ridley. 2013. “Pharmaceutical Followers.” International Journal of Industrial Organization. 31 (5): 538–553 (NBER working paper)
Paul Geroski Award for one of the two best papers in the journal that year.
- Margaret K. Kyle and David B. Ridley. 2007. “Would Greater Transparency and Uniformity of Health Care Prices Benefit Poor Patients?” Health Affairs. 26 (5): 1384-1391. (Working paper)
- Henry G. Grabowski, David B. Ridley, and Kevin A. Schulman. 2007. “Entry and Competition in Generic Biologics.” Managerial and Decision Economics. 28: 439-451. (Working paper)
- David B. Ridley and Kirsten Axelsen. 2006. “Impact of Medicaid Preferred Drug Lists on Therapeutic Adherence.” Pharmacoeconomics. 24, Suppl. 3: 65-78.
When businesses cluster, they engage in more intense price competition. So why cluster? Followers cluster near leaders to i) free ride on the demand information of the market leader, ii) because they can differentiate their products and mitigate price competition, and iii) because zoning forces clustering.
- David B. Ridley. 2013. “Hotelling’s Law.” In D. Teece and M. Augier, eds. The Palgrave Encyclopedia of Strategic Management. (Working paper)
- David B. Ridley, Frank A. Sloan, and Yan Song. “Retail Zoning and Competition.”
- Gabriel A. Picone, David B. Ridley, and Paul A. Zandbergen. 2009. “Distance Decreases with Differentiation: Strategic Agglomeration by Retailers.” International Journal of Industrial Organization. 27 (3): 463-473. (Working paper)
- David B. Ridley. 2008. “Herding versus Hotelling: Market Entry with Costly Information.” Journal of Economics and Management Strategy. 17 (3): 607-631. (Working paper)
For more information, see my Google Scholar page.