Working Paper: NBER ID: w23068
Authors: Margaret Kyle; Heidi L. Williams
Abstract: Alan Garber and Jonathan Skinner (2008) famously conjectured that the US health care system was “uniquely inefficient” relative to other countries. We test this idea using cross-country data on prescription drug sales newly linked with an arguably objective measure of relative therapeutic benefits, or drug quality. Specifically, we investigate how higher and lower quality drugs diffuse in the US relative to Australia, Canada, Switzerland, and the UK. Our tabulations suggest that lower quality drugs diffuse more in the US relative to high quality drugs, compared to each of our four comparison countries – consistent with Garber and Skinner’s conjecture.
Keywords: health care efficiency; prescription drugs; cross-country comparison
JEL Codes: H51; I1; O3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Drug Quality (ASMR ratings) (L15) | Rate of Diffusion (sales volume) (C69) |
| US health care system inefficiencies (H51) | Drug diffusion patterns (C22) |
| Lower-quality drugs (L65) | Diffuse more rapidly in the US (F29) |
| Higher-quality drugs (L65) | Diffuse less rapidly in the US (F29) |