Innovation policy often involves an uncomfortable trade-off between rewarding innovators sufficiently and providing the innovation at the lowest possible price. However, in health care markets with insurance for innovative goods, society may be able to ensure efficient rewards for inventors and...

Intellectual property rights are viewed as essential to medical innovation, but very often involve social costs due to patent monopolies and other inefficiencies. We review the positive theory of innovation in health care, as it relates to the determination of innovation demand and supply. The...