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The Economic Benefits of Pharmaceutical Innovations: The Case of Cox-2 Inhibitors

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  • Craig L. Garthwaite

Abstract

Despite dramatic improvements in medical technology, little attention has been paid to the role of these innovations in improving economic outcomes. This study estimates the labor supply effects of Cox-2 inhibitors, a widely prescribed class of pharmaceuticals used for the treatment of chronic pain and inflammation and primarily marketed under the brand names Vioxx, Celebrex, and Bextra. This paper exploits the removal of Vioxx from the market in 2004 as an exogenous change in drug use. This removal was associated with a 0.35 percentage point decrease in overall labor force participation and $19 billion in lost wages. (JEL I12, J22, L65, O31).

Suggested Citation

  • Craig L. Garthwaite, 2012. "The Economic Benefits of Pharmaceutical Innovations: The Case of Cox-2 Inhibitors," American Economic Journal: Applied Economics, American Economic Association, vol. 4(3), pages 116-137, July.
  • Handle: RePEc:aea:aejapp:v:4:y:2012:i:3:p:116-37
    Note: DOI: 10.1257/app.4.3.116
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    References listed on IDEAS

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    1. Bartel, Ann & Taubman, Paul, 1979. "Health and Labor Market Success: The Role of Various Diseases," The Review of Economics and Statistics, MIT Press, vol. 61(1), pages 1-8, February.
    2. Harsha Thirumurthy & Joshua Graff Zivin & Markus Goldstein, 2008. "The Economic Impact of AIDS Treatment: Labor Supply in Western Kenya," Journal of Human Resources, University of Wisconsin Press, vol. 43(3), pages 511-552.
    3. Steven Haider & David Loughran, 2001. "Elderly Labor Supply: Work or Play?," Working Papers 01-09, RAND Corporation.
    4. Berndt, Ernst R. & Finkelstein, Stan N. & Greenberg, Paul E. & Howland, Robert H. & Keith, Alison & Rush, A. John & Russell, James & Keller, Martin B., 1998. "Workplace performance effects from chronic depression and its treatment," Journal of Health Economics, Elsevier, vol. 17(5), pages 511-535, October.
    5. Steven Haider & David S Loughran, 2001. "Elderly Labor Supply Work or Play?," Working Papers DRU-2582, RAND Corporation.
    6. Duggan, Mark, 2005. "Do new prescription drugs pay for themselves?: The case of second-generation antipsychotics," Journal of Health Economics, Elsevier, vol. 24(1), pages 1-31, January.
    7. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. “The Economic Benefits of Pharmaceutical Innovations: The Case of Cox-2 Inhibitors,” C. Garthwaite (2012)
      by afinetheorem in A Fine Theorem on 2013-03-20 12:37:41

    Citations

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    Cited by:

    1. Moore, Timothy J., 2015. "The employment effects of terminating disability benefits," Journal of Public Economics, Elsevier, vol. 124(C), pages 30-43.
    2. Aline Bütikofer & Meghan M. Skira, 2018. "Missing Work Is a Pain: The Effect of Cox-2 Inhibitors on Sickness Absence and Disability Pension Receipt," Journal of Human Resources, University of Wisconsin Press, vol. 53(1), pages 71-122.
    3. Collins, J. Michael & Simon, Kosali I. & Tennyson, Sharon, 2013. "Drug withdrawals and the utilization of therapeutic substitutes: The case of Vioxx," Journal of Economic Behavior & Organization, Elsevier, vol. 86(C), pages 148-168.
    4. Johanna Catherine Maclean & Keshar M. Ghimire & Lauren Hersch Nicholas, 2017. "The Effect of State Medical Marijuana Laws on Social Security Disability Insurance and Workers' Compensation Claiming," NBER Working Papers 23862, National Bureau of Economic Research, Inc.
    5. Rodrigo Camejo & Clare McGrath & Marisa Miraldo & Frans Rutten, 2014. "Distribution of health-related social surplus in pharmaceuticals: an estimation of consumer and producer surplus in the management of high blood lipids and COPD," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(4), pages 439-445, May.
    6. Lauren Hersch Nicholas & Johanna Catherine Maclean, 2016. "The effect of medical marijuana laws on the health and labor supply of older adults: Evidence from the Health and Retirement Study," NBER Working Papers 22688, National Bureau of Economic Research, Inc.
    7. Johanna Catherine Maclean & Lauren Hersch Nicholas & Keshar M. Ghimire, 2017. "The Impact of State Medical Marijuana Laws on Social Security Disability Insurance and Workers' Compensation Benefit Claiming," Working Papers id:12111, eSocialSciences.
    8. Harris, Matthew & Kessler, Lawrence & Murray, Matthew & Glenn, Beth, 2017. "Prescription Opioids and Labor Market Pains: The Effect of Schedule II Opioids on Labor Force Participation and Unemployment," MPRA Paper 86586, University Library of Munich, Germany, revised 28 Mar 2018.

    More about this item

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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