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EVALUATING INNOVATION AND MORAL HAZARD IN

By  and Paris Cleanthous and Paris Cleanthous

Abstract

This paper formulates an empirical methodology that evaluates pharmaceutical innovation in the American antidepressant market by quantifying patient welfare benefits from innovation. While evaluating pharmaceutical innovation in antidepressants, I uncover and address the moral hazard issue that arises due to the existence of prescription drug insurance coverage. A combination of market-level data, drug and patient characteristics are used to estimate demand for all antidepres-sants between 1980 and 2001. The paper estimates large and varied patient welfare gains due to innovation and helps explain a detected divergence between social and private patient benefits by the existence of insurance

Topics: Health, Innovation, Moral Hazard, Pharmaceuticals, Welfare
Year: 2010
OAI identifier: oai:CiteSeerX.psu:10.1.1.940.385
Provided by: CiteSeerX
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