Unbiased Analysis of Today's Healthcare Issues
Consider the case of two drugs, Drug A and Drug B. Both drugs treat patients with the same disease. Further, assume they are close substitutes. When Drug A loses it’s patent and generics can enter the market, one would expect Drug A’s market share (brand + generic) to rise. In fact, Drug A’s market share…
An interesting article by Charles Silver and David A. Hyman argues that we should do away with patents for pharmaceuticals and move to a prize based system. They write in Vox: A well-designed prize regime would lower drug prices by eliminating drug monopolies, yet it would also create the necessary incentives for innovation, including incentives to…
Below are some excerpts from seminal papers examining how changes in reimbursement or market size affect pharmaceutical innovation. Acemoglu and Lin (2004): Our estimates suggest that a 1 percent increase in the size of the potential market for a drug category leads to a 6 percent increase in the total number of new drugs entering the…
Currently, robot-assisted surgery today is dominated by the da Vinci Surgical System. The device is highly regarded, but is heavy (weighs half a ton) and expensive ($1.8m). Plus it uses proprietary software, which means that physicians and engineers not associated with da Vinci cannot alter its operating system. Change is on the horizon, however. “None…
Planet Money has a very interesting article about software patents and companies who exist for the sole purpose of buying these assets and suing other companies. Computer programmers themselves don’t even like their own patents. In previous posts, I’ve made arguments for limiting patents for pharmaceuticals and the cases for software patents is even stronger.…
In general, I am weary of patents (see my Healthcare Manifesto and Against Intellectual Property posts). Sure, they may be useful to spur innovation, but they also harm innovation since one cannot modify or improve a product while there is still a patent. Further, patents generate rent-seeking where inventors spent tons of time wrangling to…
Markets win. Meloso D, Copic J, and Bossaerts P. (2009) “Promoting Intellectual Discovery: Patents Versus Markets” Science” Vol. 323. no. 5919, pp. 1335 – 1339.
The enforcement of intellectual property rights (IPR) in less developed countries is currently a topic of much public debate. Whether it is protecting the copyrights of Western recording artists or preventing `copycat’ technology goods, OECD countries are attempting to compel less developed countries (LDCs) to enforce IPR in their country. No area of IPR enforcement…
Would drug importation from countries such as Canada be welfare improving for the U.S.? In the short run, the answer is yes. Lower prices will made pharmaceuticals more affordable and more pharmaceutical consumption closer to the static equilibrium level. In the long run, however, lower drug company profits may lead to less innovation in terms…