In this seminar, Dr Cook presented results from a study he published recently in the International Journal of the Economics of Business with Joseph Golec (University of Connecticut), John Vernon and George Pink (both University of North Carolina Chapel Hill).  Their analysis illustrates how real options can be used to value the effect of path dependence, that is, the additional value that incremental innovation adds when the innovation is a first step along a path to a major innovation.  Of concern is that many payers, particularly European governments, may use some form of drug evaluation method that ignores this option value. 

Dr Cook is Director, US Health Economics and Outcomes Research at Pfizer.