Early Retirement and Public Disability Insurance Applications: Exploring the Impact of Depression

This paper investigates the impact of depression on labor force participation among older workers. Empirically, we use two analytic strategies and rely on a sample drawn from the Health and Retirement Survey. Depression directly and indirectly increases individuals%u2019 probability of retiring early and applying for DI benefits, after accounting for other predictors of labor force exit. Accounting for the independent effects of depression, disability associated with physical illness may be smaller than the official statistics suggest. There may be great economic gains in increasing depression treatment awareness and access to treatment for individuals, employers and society.

The Effect of FDA Advisories on Branded Pharmaceutical Firms' Valuations and Promotion Efforts

The US Food and Drug Administration (FDA) expends considerable efforts in regulating medications approved for use. Yet the impact of medication labeling changes on brand pharmaceutical products, and whether and what firms do to respond to increased information regarding the safety and efficacy of a drug, have not be characterized. We propose a behavioral framework for examining the effects of FDA advisories on branded pharmaceutical firms and their products. We empirically assess the impact of recent FDA advisories on the stock market valuations of a sample of branded pharmaceutical manufacturing firms using event study methods. We examine whether and how branded pharmaceutical manufacturers respond to an advisory by assessing changes in promotion compared to non-affected firms. We find firms targeted by an advisory have average stock price declines of 3% in three days and 11% in five days following the advisory release, and in turn appear to decrease total physician-directed promotion spending, journals ads and detailing visits significantly six months following the advisory release; the provision of free samples is unaffected. We find no changes among therapeutic substitutes unaffected by the advisory. Results of sensitivity analyses suggest firms with market dominant positions experience similar decreases in stock market valuations and physician-directed promotion compared to pooled results. The results are also robust to alternative definitions of the timing of advisory release dates and the severity of advisories’ wording. Theory and empirical results suggest the public release of FDA advisories negatively impacts firm’s short-term market valuations. The results suggest an additional rationale for previously documented declines in prescribing after FDA advisory releases – significant declines in physician-directed promotion following FDA advisory releases; the combined (and likely correlated) effects of the release of the advisory and declines in physician-directed promotion on prescribing behavior are likely larger than the sum of the independent effects.

Public research funding and pharmaceutical prices: do Americans pay twice for drugs?

In the debate over prescription drug pricing, some pharmaceutical industry critics claim that U.S. taxpayers pay twice for costly therapies, because publicly supported research is a major contributor to drug discovery and American taxpayers are inadequately rewarded for their research investment due to high drug prices. In fact, the empirical evidence supporting these claims is weak, and the pay twice argument distracts from important efforts to ensure that impactful new drugs continue to be developed and made widely available to patients who need them.Published versio

Pricing in the Market for Anticancer Drugs

In 2011, Bristol-Myers Squibb set the price of its newly approved melanoma drug ipilimumab— brand name Yervoy—at $120,000 for a course of therapy. The drug was associated with an incremental increase in life expectancy of four months. Drugs like ipilimumab have fueled the perception that the launch prices of new anticancer drugs and other drugs in the so-called "specialty" pharmaceutical market have been increasing over time and that increases are unrelated to the magnitude of the expected health benefits. In this paper, we discuss the unique features of the market for anticancer drugs and assess trends in the launch prices for 58 anticancer drugs approved between 1995 and 2013 in the United States. We restrict attention to anticancer drugs because the use of median survival time as a primary outcome measure provides a common, objective scale for quantifying the incremental benefit of new products. We find that the average launch price of anticancer drugs, adjusted for inflation and health benefits, increased by 10 percent annually—or an average of$8,500 per year—from 1995 to 2013. We argue that the institutional features of the market for anticancer drugs enable manufacturers to set the prices of new products at or slightly above the prices of existing therapies, giving rise to an upward trend in launch prices. Government-mandated price discounts for certain classes of buyers may have also contributed to launch price increases as firms sought to offset the growth in the discount segment by setting higher prices for the remainder of the market

Stockpiling medicines at the onset of the COVID-19 pandemic: an empirical analysis of national prescription drug sales and prices

Hospitals with Coronavirus disease (COVID-19) demand surges at the onset of the pandemic report medication shortages, a worrisome phenomenon as inadequate medication supplies negatively affect patient outcomes. The popular press implicates a lack of raw ingredients and spikes in purchases but rigorous research is needed to more accurately identify shortage causes. We leverage a quasi-experimental design on IQVIA’s National Sales Perspectives™ data from 2018-2020 with a focus on medicines related to U.S. hospital-based COVID-19 treatment and a set of control medicines not used for COVID-19. We contribute to supply chain theory by empirically demonstrating that stockpiling among U.S. medical providers in the early phase of the pandemic accounts for the shortages. The buyers’ behavior results in concentration of the sales volume of COVID-19 medicines in the first two months of the pandemic. After these first two months, the sales volume of drugs for COVID-19 treatment decreases significantly despite a nationwide increase in COVID-19-related hospitalizations. An implication for manufacturers is that orders due to stockpiling by downstream buyers early on in a pandemic period should be discounted when predicting future demand. We also investigate another potential cause: expected price increases in the future. Counter to concerns that drug manufacturers would engage in price gouging behavior, we find no evidence of price inflation for these drugs. Our results are robust to numerous sensitivity checks and have implications for manufacturers, hospitals, and policymakers that may improve medicine supply resiliency against future threats.https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3988183First author draf

Valuing rare pediatric drugs: an economics perspective

There is a coming wave of novel genetic therapies aiming to treat rare pediatric disease. A large literature investigates the valuation of new treatments, but the valuation of treatments for rare pediatric illness raises a host of unique issues. In this paper, we review the challenges of applying both the standard economic model and standard approaches to estimating cost-effectiveness using the quality-adjusted life year (QALY) to this case. We argue that there are a large number of special issues that have only been partially addressed by past work and we conclude that more data and the development of new methods are vital as innovators, health technology assessment practitioners and policymakers confront the launch of these new drugs.https://www.nber.org/papers/w27978First author draf

Estimating the financial impact of gene therapy in the U.S.

We empirically assess the potential financial impact of future gene therapies on the US economy. After identifying 109 late-stage gene therapy clinical trials currently underway, we estimate the number of new and existing patients with corresponding diseases to be treated by these gene therapies, developing and applying novel mathematical models to estimate the increase in quality-adjusted life years for each approved gene therapy. We then simulate the launch prices and the expected spending for these therapies over a 15-year time horizon. Under conservative assumptions, the results of our simulation suggest that an expected total of 1.09 million patients will be treated by gene therapy from January 2020 to December 2034. The expected peak annual spending on these therapies is $25.3 billion, and the expected total spending from January 2020 to December 2034 is$306 billion. Assuming a linear pace of future gene therapy development fitted to past experience, our spending estimate increases by only 15.7% under conservative assumptions. As a proxy for the impact of expected spending on different public and private payers, we decompose the estimated annual spending by treated age group. Since experience suggests that insurers with annual budget constraints may restrict access to therapies with expected benefit to the patient, we consider various methods of payment to ensure access to these therapies even among those insured by the most budget-constrained payers.https://www.nber.org/papers/w28628First author draf

The Impact of Emerging Safety and Effectiveness Evidence on the Use of Physician-administered Drugs: The Case of Bevacizumab for Breast Cancer

Spending on physician-administered drugs is high and uses not approved by the U.S. Food and Drug Administration (FDA) are frequent. While these drugs may be targets of future policy efforts to rationalize use, little is known regarding how physicians respond to emerging safety and effectiveness evidence

Effects of FDA Advisories on the Pharmacologic Treatment of ADHD, 2004–2008

This study assessed the effect of public health advisories issued between 2005 and 2007 by the U.S. Food and Drug Administration (FDA) on treatments of attention-deficit hyperactivity disorder (ADHD) and physician prescribing practices