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Hedonic Analysis of Arthritis Drugs

In: Medical Care Output and Productivity

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  • Iain M. Cockburn
  • Aslam H. Anis

Abstract

We examine the relationship between quality'' and market outcomes for a group of drugs used to treat rheumatoid arthritis. Though this is a widespread and debilitating disease with very substantial impacts on the health of patients and on the economy, currently available drugs have limited efficacy and serious side effects. Clinical research conducted since these products were approved has resulted in substantial revisions to the body of scientific information available to physicians. The relative quality' of these drugs (as captured by efficacy and toxicity measurements reported in peer-reviewed clinical trials) has changed markedly over the past 15 years. Yet in our analysis of US wholesale prices we find that relative prices appear to be only weakly related to quality. We do however find a relationship between changes in reported efficacy and toxicity and the evolution of quantity shares in this market.

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This chapter was published in:

  • David M. Cutler & Ernst R. Berndt, 2001. "Medical Care Output and Productivity," NBER Books, National Bureau of Economic Research, Inc, number cutl01-1.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 7637.

    Handle: RePEc:nbr:nberch:7637

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    References

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    1. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July.
    2. Ernst R. Berndt & Linda T. Bui & David H. Lucking-Reiley & Glen L. Urban, 1996. "The Roles of Marketing, Product Quality, and Price Competition in the Growth and Composition of the U.S. Antiulcer Drug Industry," NBER Chapters, in: The Economics of New Goods, pages 277-328 National Bureau of Economic Research, Inc.
    3. Anis, Aslam H. & Wen, Quan, 1998. "Price regulation of pharmaceuticals in Canada," Journal of Health Economics, Elsevier, vol. 17(1), pages 21-38, January.
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    Cited by:
    1. Ana Aizcorbe & Nicole Nestoriak, 2010. "Price Indexes for Drugs: A Review of the Issues," BEA Working Papers 0050, Bureau of Economic Analysis.
    2. Sergi Jimenez-Martin & Antonio Cabrales, 2007. "The determinants of pricing in pharmaceuticals : are U.S. prices really higher than those of Canada?," Economics Working Papers we074021, Universidad Carlos III, Departamento de Economía.
    3. Ernst R. Berndt & David M. Cutler & Richard Frank & Zvi Griliches & Joseph P. Newhouse & Jack E. Triplett, 2001. "Price Indexes for Medical Care Goods and Services -- An Overview of Measurement Issues," NBER Chapters, in: Medical Care Output and Productivity, pages 141-200 National Bureau of Economic Research, Inc.
    4. Bart Hobijn, 2001. "Is equipment price deflation a statistical artifact?," Staff Reports 139, Federal Reserve Bank of New York.
    5. C. Lanier Benkard & Patrick Bajari, 2003. "Hedonic Price Indexes with Unobserved Product Characteristics, and Application to PC's," NBER Working Papers 9980, National Bureau of Economic Research, Inc.
    6. Paul Chwelos, 2003. "Approaches to performance measurement in hedonic analysis: Price indexes for laptop computers in the 1990's," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(3), pages 199-224.
    7. Antonio Cabrales & Sergi Jiménez-Martín, 2008. "The Determinants of Pricing in Pharmaceuticals: Are U.S. prices really so high?," Working Papers 2008-18, FEDEA.
    8. David E. Lebow & Jeremy B. Rudd, 2001. "Measurement error in the consumer price index: where do we stand?," Finance and Economics Discussion Series 2001-61, Board of Governors of the Federal Reserve System (U.S.).
    9. Joseph DiMasi & Cherie Paquette, 2005. "The economics of follow-on drug research and development: Trends in entry rates and the timing of development — The authors’ reply," PharmacoEconomics, Springer, vol. 23(12), pages 1193-1202, December.
    10. Benkard, C. Lanier & Bajari, Patrick, 2003. "Hedonic Price Indexes with Unobserved Product Characteristics, and Application to PC's," Research Papers 1841, Stanford University, Graduate School of Business.
    11. Ernst R. Berndt & Robert S. Pindyck & Pierre Azoulay, 1999. "Network Effects and Diffusion in Pharmaceutical Markets: Antiulcer Drugs," NBER Working Papers 7024, National Bureau of Economic Research, Inc.
    12. Ernst R. Berndt & Robert S. Pindyck & Pierre Azoulay, 2003. "Consumption Externalities and Diffusion in Pharmaceutical Markets: Antiulcer Drugs," Journal of Industrial Economics, Wiley Blackwell, vol. 51(2), pages 243-270, 06.

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