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劳动经济学workshop: Pharmaceuticals, Incremental Innovation and Market Exclusivity
发布日期：2015-10-09 08:28 来源：北京大学国家发展研究院
Labor Workshop Time: 10月9日（周五）14:00-15:30 Room: 万众楼小教室 Speaker: 尹妮娜（中央财经大学） Paper: “Pharmaceuticals, Incremental Innovation and Market Exclusivity" Abstract: This paper assesses the welfare gains from incremental innovation in pharmaceuticals. Such innovation can yield consumer gains through improved quality, but the additional market exclusivity granted to innovators may also delay generic entry, a practice referred to as ``evergreening", and reduce consumer surplus. Quantifying this tradeoff is vital in determining the optimal patent policy and regulatory treatment of incremental innovation. To shed light on this problem, I focus on incremental innovations in selective serotonin reuptake inhibitor (SSRI) anti-depressant drugs. Based on individual-level prescription data, I estimate the patients' demands for antidepressants with a conditional logit model, and backed up firms' marginal costs with Bertrand-Nash model. By evaluating the welfare changes from status quo to the counterfactual scenarios in which market exclusivity and incremental innovation become no longer available, I found that the consumer surplus loss due to market exclusivity extensions far exceeds the consumer surplus benefits from incremental innovation. Without taking into account the innovation costs, the innovators benefit from incremental innovation by $1.55 billion even without market exclusivity. Overall, the evidence indicates that the market exclusivity granted for incremental innovations in SSRIs has resulted in a $37 billion social welfare loss from 1996 to 2011. The result suggests that policy makers may need to revisit the provisions for granting market exclusivity to incremental innovations.
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劳动经济学workshop: Pharmaceuticals, Incremental Innovation and Market Exclusivity
发布日期：2015-10-09 08:28 来源：北京大学国家发展研究院
Labor Workshop Time: 10月9日（周五）14:00-15:30 Room: 万众楼小教室 Speaker: 尹妮娜（中央财经大学） Paper: “Pharmaceuticals, Incremental Innovation and Market Exclusivity" Abstract: This paper assesses the welfare gains from incremental innovation in pharmaceuticals. Such innovation can yield consumer gains through improved quality, but the additional market exclusivity granted to innovators may also delay generic entry, a practice referred to as ``evergreening", and reduce consumer surplus. Quantifying this tradeoff is vital in determining the optimal patent policy and regulatory treatment of incremental innovation. To shed light on this problem, I focus on incremental innovations in selective serotonin reuptake inhibitor (SSRI) anti-depressant drugs. Based on individual-level prescription data, I estimate the patients' demands for antidepressants with a conditional logit model, and backed up firms' marginal costs with Bertrand-Nash model. By evaluating the welfare changes from status quo to the counterfactual scenarios in which market exclusivity and incremental innovation become no longer available, I found that the consumer surplus loss due to market exclusivity extensions far exceeds the consumer surplus benefits from incremental innovation. Without taking into account the innovation costs, the innovators benefit from incremental innovation by $1.55 billion even without market exclusivity. Overall, the evidence indicates that the market exclusivity granted for incremental innovations in SSRIs has resulted in a $37 billion social welfare loss from 1996 to 2011. The result suggests that policy makers may need to revisit the provisions for granting market exclusivity to incremental innovations.
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