Rewarding inventors with inefficient monopoly power has long been regarded as the price of encouraging innovation. Public prescription drug insurance escapes that trade-off and achieves an elusive goal: lowering static deadweight loss, while simultaneously encouraging dynamic investments in...

The premature cancer mortality rate has been declining in Canada, but there has been considerable variation in the rate of decline across cancer sites. I analyze the effect that pharmaceutical innovation had on premature cancer mortality in Canada during the period 2000-2011, by investigating...

This paper provides evidence that risk aversion leads pharmaceutical firms to underinvest in radical innovation. We define a drug candidate as novel if it is molecularly distinct from prior candidates. Using our measure, we show that firms face a risk-reward tradeoff when investing in novel...

Recent work linking the adoption of key organizational practices to productivity raises an important question: if adoption increases productivity so dramatically, why does adoption across an industry take so long? This paper explores this question in the context of one particularly interesting...

In the United States, the Food and Drug Administration (FDA) agency is responsible for regulating the safety and efficacy of biopharmaceutical drug products. Furthermore, the FDA is tasked with speeding new medical innovations to market. These two missions create an inherent tension within the...

The introduction of Medicare in 1965 was the single largest change in health insurance coverage in U.S. history. Many economists and commentators have conjectured that the introduction of Medicare may have also been an important impetus for the development of new drugs that are now commonly used...

This paper compares the clinical trial strategies and performance of large, established (quot;maturequot;) biopharmaceutical firms to those of smaller (quot;early stagequot;) firms that have not yet successfully developed a drug. We study a sample of 235 cancer drug candidates that entered...

This paper examines trends in the aggregate productivity of the pharmaceutical sector over the past three decades. We incorporate Ricardo's insight about demand-driven productivity in settings of variable scarce resources, and estimate the industry's responsiveness to changes in demand over this...

We perform an econometric investigation of the contribution of pharmaceutical innovation to mortality reduction and growth in lifetime per capita income. In both of the periods studied (1970-80 and 1980-91), there is a highly significant positive relationship across diseases between the increase...

We examine the relationship between patent protection for pharmaceuticals and investment in development of new drugs. Patent protection has increased around the world as a consequence of the TRIPS Agreement, which specifies minimum levels of intellectual property protection for members of the...