Many studies indicate that increasing expenditure on the development of medical technology is the main impetus behind rising health care costs. This study examines the relationship between medical technology companies' goal to maximize profit via Research and Development investments and R and D‘s effects on the competing factors of consumer's health benefit and health care costs. Through analysis of pharmaceutical company profits versus R and D costs, this project attempts to map out a level of optimum R and D investment spending for firms. On the consumer side, this project also attempts to map out R and D investment levels by firms that yield the best health benefit for patients of drug treatments. Finally, the project attempts to determine if an R and D optimum exists that can increase benefit to both firms and consumers.
Sameer J. Shah. "Determining Optimal Firm and Consumer Research and Development Spending in the Medical Technology Sector." Proceedings of the New York State Economics Association. vol. 3, September 2010, p. 127-136
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