Estimating the Share of Social Surplus Generated by Pharmaceutical Innovation Accruing to Manufacturers: A Systematic...

Pharmaceutical innovation operates within an implicit social contract that seeks to balance incentives for future drug development with equitable access to current therapies. A key metric for evaluating this balance is producer surplus (PS), which represents the share of total social surplus (the sum of consumer surplus [CS] and PS) captured by manufacturers. We explore the determinants and distribution of estimated supply-side surplus share across therapeutic areas, drug classes, and product life cycles.

We conducted a systematic literature review of empirical studies on PS in pharmaceuticals. Embase and EconLit databases were searched from database inception to April 2025. Search practices followed Preferred Reporting Items for Systematic reviews and Meta-Analyses (PRISMA) guidance.

A total of 24 studies were included, representing 68 unique PS estimates. Our analysis reveals wide variation in PS estimates, from 0.3% to 260%, with a median of approximately 15%. The range of estimates is driven primarily by disease-specific factors and methodological inconsistencies. Notably, most studies fail to account for the full spectrum of social benefits or to accurately identify manufacturer revenues, often conflating PS with broader supply chain gains. Only one study met rigorous criteria for both PS and CS definitions.

The limitations of current studies on PS hinder the utility of PS in value assessment and policymaking. We argue for greater methodological rigor and consistency to improve PS estimation and inform sustainable public policy.