Evaluating Innovation and Moral Hazard in Pharmaceuticals
AbstractThis paper formulates an empirical methodology that evaluates pharmaceutical innovation in the American antidepressant market by quantifying patient welfare benefits from innovation. While evaluating pharmaceutical innovation in antidepressants, I uncover and address the moral hazard issue that arises due to the existence of prescription drug insurance coverage. A combination of market-level data, drug and patient characteristics are used to estimate demand for all antidepressants between 1980 and 2001. The paper estimates large and varied patient welfare gains due to innovation and helps explain a detected divergence between social and private patient benefits by the existence of insurance.
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Bibliographic InfoPaper provided by University of Cyprus Department of Economics in its series University of Cyprus Working Papers in Economics with number 03-2011.
Length: 49 pages
Date of creation: Jan 2011
Date of revision:
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Web page: http://www.econ.ucy.ac.cy
Health; Innovation; Moral Hazard; Pharmaceuticals; Welfare;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-02-12 (All new papers)
- NEP-COM-2011-02-12 (Industrial Competition)
- NEP-CTA-2011-02-12 (Contract Theory & Applications)
- NEP-HEA-2011-02-12 (Health Economics)
- NEP-INO-2011-02-12 (Innovation)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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96-24, Massachusetts Institute of Technology (MIT), Department of Economics.
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- Frank R. Lichtenberg, 1996. "The Effect of Pharmaceutical Utilization and Innovation on Hospitalization and Mortality," NBER Working Papers 5418, National Bureau of Economic Research, Inc.
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