Working Paper: NBER ID: w11810
Authors: Tomas J. Philipson; Anupam B. Jena
Abstract: The social value of an innovation is comprised of the value to consumers and the value to innovators. We estimate that for the HIV/AIDS therapies that entered the market from the late 1980's onwards, innovators appropriated only 5% of the social surplus arising from these new technologies. Despite the high annual costs of these drugs to patients, the low share of social surplus going to innovators raises concerns about advocating cost-effectiveness criteria that would further reduce this share, and hence further reduce incentives for innovation.
Keywords: No keywords provided
JEL Codes: I1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| introduction of new HIV/AIDS drugs (O15) | consumer surplus (D46) |
| introduction of new HIV/AIDS drugs (O15) | producer surplus (D22) |
| share of surplus captured by innovators (O36) | incentives for further innovation (O31) |
| high prices of HIV/AIDS drugs (P22) | long-term R&D incentives (O38) |