Yehuda Bassok

We develop a general framwork to predict the demand for a new drug when past demand data is not available. Our method is based on demogarphic data, logistic ability and training level of the population, physicians and Parmacists.

This is scholarly book the summarizes my work in this area and some new topics. I hope to finish it by May this year. It will include about 150-175 pages.

Developing and producing drugs and vaccines is a risky business. First, success rates in developing new drugs and vaccines are low. Second, investments in research and development, capacity and production are very large. They are usually made long before the actual demand is known to the investor and thus the investor is assuming the demand risk. Finally these investments are irreversible. If the demand turns to be high investors enjoy high profits. But, if the demand does not materialize investors lose hundreds of million of dollars. These risks are universal and widespread all over the world: in high income countries as well as medium and low income countries. The difference between the low income and high income countries is that in the low income countries there are no markets for drugs and vaccines: neither the population nor the government can afford to pay the full price of drugs and vaccines. Thus, donors must provide a subsidy and pay the lion share of the cost of delivering the drugs and vaccines in the low income countries. There are many different mechanisms in which donors can subsidize drugs and vaccines. These mechanisms can affect the motivation of pharmaceuticals to invest in research and development, the demand for the drug or vaccine, the corruption levels and several other important components of the health system. The objective of this study is to build on an existing mechanism that is designed to encourage pharmaceutical companies to invest in the development and production of new vaccines and drugs. Our contribution is in ensuring that grand corruption is minimized, that donors assume acceptable risks and that incentives of all players are aligned.