Working Paper: NBER ID: w28858
Authors: Dennis Byrski; Fabian Gaessler; Matthew J. Higgins
Abstract: Prior literature has established a link between changes in market size and pharmaceutical innovation; whether a link exists with scientific research remains an open question. If upstream research is not responsive to these changes, the kinds of scientific discoveries that flow into future drug development could be disconnected from downstream demand. We explore this question by exploiting the effects of quasi-experimental variation in market size introduced by Medicare Part D. We find no causal relationship between market size and biomedical research in the decade following the implementation of Medicare Part D. While many factors have been shown to motivate scientists to conduct research, this result suggests that changes in market size provide no such incentive. We do find, however, limited support for a response by corporate scientists conducting applied research. Implications for pharmaceutical innovation policy are discussed.
Keywords: No keywords provided
JEL Codes: I13; I18; L65; O31; O32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Medicare Part D (H51) | market size (L25) |
| market size (L25) | drug development activities (O32) |
| market size (L25) | biomedical research (I23) |
| market size (L25) | corporate-affiliated publications (M14) |
| corporate-affiliated publications (M14) | scientific research output (O32) |