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The Competitive Effects of Drug Withdrawals

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Author Info
John Cawley
John A. Rizzo

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Abstract

In September 1997, the anti-obesity drugs Pondimin and Redux, ingredients in the popular drug combination fen-phen, were withdrawn from the market for causing potentially fatal side effects. That event provides an opportunity for studying how consumers respond to drug withdrawals. In theory, remaining drugs in the therapeutic class could enjoy competitive benefits, or suffer negative spillovers, from the withdrawal of a competing drug. Our findings suggest that, while the withdrawal of a rival drug may impose negative spillovers in the form of higher patient quit rates, on the whole non-withdrawn drugs in the same therapeutic class enjoy competitive benefits in the form of higher utilization.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11223.

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Date of creation: Mar 2005
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Handle: RePEc:nbr:nberwo:11223

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I1 - Health, Education, and Welfare - - Health

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  1. Bosch, Jean-Claude & Eckard, E Woodrow & Singal, Vijay, 1998. "The Competitive Impact of Air Crashes: Stock Market Evidence," Journal of Law & Economics, University of Chicago Press, vol. 41(2), pages 503-19, October.
  2. Stern, S. & Trajtenberg, M., 1998. "Empirical Implications of Physician Authority in Pharmaceutical Decisionmaking," Papers 24-98, Tel Aviv.
    Other versions:
  3. Dowdell, Thomas D. & Govindaraj, Suresh & Jain, Prem C., 1992. "The Tylenol Incident, Ensuing Regulation, and Stock Prices," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 27(02), pages 283-301, June. [Downloadable!]
  4. John Cawley, 2004. "The Impact of Obesity on Wages," Journal of Human Resources, University of Wisconsin Press, vol. 39(2). [Downloadable!] (restricted)
  5. Hill, Joanne & Schneeweis, Thomas, 1983. " The Effect of Three Mile Island on Electric Utility Stock Prices: A Note," Journal of Finance, American Finance Association, vol. 38(4), pages 1285-92, September. [Downloadable!] (restricted)
  6. Pierre Azoulay, 2002. "Do Pharmaceutical Sales Respond to Scientific Evidence?," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 11(4), pages 551-594, December. [Downloadable!] (restricted)
  7. Dranove, David & Olsen, Chris, 1994. "The Economic Side Effects of Dangerous Drug Announcements," Journal of Law & Economics, University of Chicago Press, vol. 37(2), pages 323-48, October.
  8. Jarrell, Gregg & Peltzman, Sam, 1985. "The Impact of Product Recalls on the Wealth of Sellers," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 512-36, June. [Downloadable!] (restricted)
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  9. Parvez Ahmed & John Gardella & Sudhir Nanda, 2002. "Wealth Effect of Drug Withdrawals on Firms and Their Competitors," Financial Management, Financial Management Association, vol. 31(3), Fall.
  10. Z. John Lu & William S. Comanor, 1998. "Strategic Pricing Of New Pharmaceuticals," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 108-118, February. [Downloadable!] (restricted)
  11. Meredith B. Rosenthal & Ernst R. Berndt & Julie M. Donohue & Arnold M. Epstein & Richard G. Frank, 2003. "Demand Effects of Recent Changes in Prescription Drug Promotion," Forum for Health Economics & Policy, Berkeley Electronic Press, vol. 6. [Downloadable!]
  12. Meredith B. Rosenthal & Ernst R. Berndt & Julie M. Donohue & Arnold M. Epstein & Richard G. Frank, 2003. "Demand Effects of Recent Changes in Prescription Drug Promotion," NBER Chapters, in: Frontiers in Health Policy Research, Volume 6, pages 1-26 National Bureau of Economic Research, Inc. [Downloadable!]
  13. Rizzo, John A, 1999. "Advertising and Competition in the Ethical Pharmaceutical Industry: The Case of Antihypertensive Drugs," Journal of Law & Economics, University of Chicago Press, vol. 42(1), pages 89-116, April.
  14. Frank R. Lichtenberg & Tomas J. Philipson, 2002. "The Dual Effects of Intellectual Property Regulations: Within- and Between- Patent Competition in the US Pharmaceuticals Industry," NBER Working Papers 9303, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  15. Ernst R. Berndt, 2002. "Pharmaceuticals in U.S. Health Care: Determinants of Quantity and Price," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 45-66, Fall. [Downloadable!] (restricted)
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