Working Paper: NBER ID: w26892
Authors: Pierre Azoulay; Ariel Fishman
Abstract: Beginning around 1990, academic medical centers have ceased to be the primary locus of industry-sponsored clinical trial activity. Instead, clinical trials have increasingly been conducted in private practices and for-profit, dedicated study sites. We examine the underlying causes of this startling evolution. On the demand side, the greater availability of non-academic investigators has enabled pharmaceutical firms to better match physicians' skills with specific projects. On the supply side, we argue that the growth of managed care health insurance has contributed to a rise in the number of non-academic physicians performing clinical research. We find evidence consistent with these claims using a unique data set containing information about 85,919 site contracts for 7,735 clinical trials between 1991 and 2003. Furthermore, we examine the gap in prevailing prices for comparable procedures conducted for clinical trials versus conventional medical care, and conclude that the effect of managed care on entry is consistent with non-academic physicians “inducing demand” so as to resist downward pressures on their income.
Keywords: clinical trials; managed care; for-profit medicine; health insurance; pharmaceutical industry
JEL Codes: I13; I23; O31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| greater availability of nonacademic investigators (I23) | more efficient trial conduct (K41) |
| growth of managed care health insurance (I13) | nonacademic physicians conducting clinical research (I23) |
| managed care creates financial pressures (I13) | physicians seek alternative revenue sources through clinical trials (I11) |
| nonacademic physicians earn two to three times more from pharmaceutical sponsors (I10) | engagement in clinical trials (C90) |
| high managed care penetration (I11) | observed increase in for-profit clinical trial activity (L38) |
| high managed care penetration (I11) | academic trial activity remains less affected (D29) |
| smaller medical practices (I11) | engage in clinical trials as a response to managed care pressures (I11) |