Health-Care Innovation and its Side Effects

Kevin Lewis

September 09, 2009

Sales Growth of New Pharmaceuticals Across the Globe: The Role of Regulatory Regimes

Stefan Stremersch & Aurélie Lemmens
Marketing Science, July-August 2009, Pages 690-708

Prior marketing literature has overlooked the role of regulatory regimes in explaining international sales growth of new products. This paper addresses this gap in the context of new pharmaceuticals (15 new molecules in 34 countries) and sheds light on the effects of regulatory regimes on new drug sales across the globe. Based on a time-varying coefficient model, we find that differences in regulation substantially contribute to cross-country variation in sales. One of the regulatory constraints investigated, i.e., manufacturer price controls, has a positive effect on drug sales. The other forms of regulation such as restrictions of physician prescription budgets and the prohibition of direct-to-consumer advertising (DTCA) tend to hurt sales. The effect of manufacturer price controls is similar for newly launched and mature drugs. By contrast, regulations on physician prescription budgets and DTCA have a differential effect for newly launched and mature drugs. Whereas the former hurts mature drugs more, the latter has a larger effect on newly launched drugs. In addition to these regulatory effects, we find that national culture, economic wealth, and lagged sales also affect drug sales. Our findings may be used as input by managers for international launch and marketing decisions. They may also be used by public policy administrators to assess the role of regulatory regimes in pharmaceutical sales growth.


Global Drug Discovery: Europe Is Ahead

Donald Light
Health Affairs, September/October 2009, Pages w969-w977

It is widely believed that the United States has eclipsed Europe in pharmaceutical research productivity. Some leading analysts claim that although fewer drugs have been discovered worldwide over the past decade, most are therapeutically important. Yet a comprehensive data set of all new chemical entities approved between 1982 and 2003 shows that the United States never overtook Europe in research productivity, and that Europe in fact is pulling ahead of U.S. productivity. Other large studies show that most new drugs add few if any clinical benefits over previously discovered drugs. I discuss ways in which Congress, employers, and insurers can increase the value of drugs and revitalize the U.S. pharmaceutical industry.


The influence of economic incentives and regulatory factors on the adoption of treatment technologies: A case study of technologies used to treat heart attacks

Mickael Bech, Terkel Christiansen Kelly Dunham, Jørgen Lauridsen, Carl Hampus Lyttkens, Kathryn McDonald, Alistair McGuire & TECH Investigators
Health Economics, October 2009, Pages 1114-1132

The Technological Change in Health Care Research Network collected unique patient-level data on three procedures for treatment of heart attack patients (catheterization, coronary artery bypass grafts and percutaneous transluminal coronary angioplasty) for 17 countries over a 15-year period to examine the impact of economic and institutional factors on technology adoption. Specific institutional factors are shown to be important to the uptake of these technologies. Health-care systems characterized as public contract systems and reimbursement systems have higher adoption rates than public-integrated health-care systems. Central control of funding of investments is negatively associated with adoption rates and the impact is of the same magnitude as the overall health-care system classification. GDP per capita also has a strong role in initial adoption. The impact of income and institutional characteristics on the utilization rates of the three procedures diminishes over time.


Induced Innovation and Social Inequality: Evidence from Infant Medical Care

David Cutler, Ellen Meara & Seth Richards
NBER Working Paper, September 2009

We develop a model of induced innovation where research effort is a function of the death rate, and thus the potential to reduce deaths in the population. We also consider potential social consequences that arise from this form of induced innovation based on differences in disease prevalence across population subgroups (i.e. race). Our model yields three empirical predictions. First, initial death rates and subsequent research effort should be positively correlated. Second, research effort should be associated with more rapid mortality declines. Third, as a byproduct of targeting the most common conditions in the population as a whole, induced innovation leads to growth in mortality disparities between minority and majority groups. Using information on infant deaths in the U.S. between 1983 and 1998, we find support for all three empirical predictions. We estimate that induced innovation predicts about 20 percent of declines in infant mortality over this period. At the same time, innovation that occurred in response to the most common causes of death favored the majority racial group in the U.S., whites. We estimate that induced innovation contributed about one third of the rise in the black-white infant mortality ratio during our period of study.


Is It Time To Reexamine The Patent System's Role In Spending Growth?

Mark Pauly
Health Affairs, September/October 2009, Pages 1466-1474

Containing health care spending growth will require changing the amount and form of new health care technology. But even if new technology lowers real resource costs by reducing the use of medical care (as through personalized medicine or by producing cost offsets), it might not lower the rate of growth of spending when patents are present: higher net value may translate into a higher price for patented products. To lower long-run spending growth, it may be necessary to change patent policy by reducing the term of patent life or linking spending growth targets to net benefits from patented products.


Healthcare non-adherence decisions and internet health information

James Weaver, Nancy Thompson, Stephanie Sargent Weaver & Gary Hopkins
Computers in Human Behavior, November 2009, Pages 1373-1380

While the internet is emerging as an important transforming mechanism for health care and public health, questions remain about its limitations. Growing evidence indicates that a significant proportion of internet health information consumers is engaging treatment strategies inconsistent with professional recommendations. This study aimed to distinguish internet users who report non-adherence behavior from their counterparts based on several personal and environmental determinants. Using information obtained via the internet to refuse or discontinue treatment recommended by a doctor or dentist proved to be a widespread (11.2%) behavior. Internet health information bolstered non-adherence appears strongly linked with personal determinants such as anxiety, diminishing health, and gender — — a pattern consistent with prior adherence research — and with environmental determinants including the perceived importance of both internet health information and internet-facilitated interpersonal interactions as well as using the internet as a social support vehicle.


Genetic Adverse Selection: Evidence from Long-Term Care Insurance and Huntington Disease

Emily Oster, Ira Shoulson, Kimberly Quaid & Ray Dorsey
NBER Working Paper, September 2009

Individual, personalized genetic information is increasingly available, leading to the possibility of greater adverse selection over time, particularly in individual-payer insurance markets; this selection could impact the viability of these markets. We use data on individuals at risk for Huntington disease (HD), a degenerative neurological disorder with significant effects on morbidity, to estimate adverse selection in long-term care insurance. We find strong evidence of adverse selection: individuals who carry the HD genetic mutation are up to 5 times as likely as the general population to own long-term care insurance. We use these estimates to make predictions about the future of this market as genetic information increases. We argue that even relatively limited increases in genetic information may threaten the viability of private long-term care insurance.


How Much Time Do Patients Spend on Outpatient Visits?: The American Time Use Survey

Louise Russell, Yoko Ibuka & Deborah Carr
The Patient: Patient-Centered Outcomes Research, Fall 2008, Pages 211-222

Background: In Crossing the Quality Chasm, the Institute of Medicine recommended that patient-centered care should not waste patients' time and should recognize the involvement of family and friends. Studies have documented the time spent by physicians on outpatient visits, but not that spent by patients and their companions. The patient's perspective provides an important yet overlooked indicator of healthcare effectiveness.

Objective: To document how much time American patients spend on outpatient visits, for what purposes (travel, waiting, receiving services), and the time required of family members and friends.

Methods: We used data from the first 4 years (2003-6) of the American Time Use Survey (ATUS), conducted by the US Census Bureau for the Bureau of Labor Statistics, which asks respondents about their activities over a 24-hour period. ATUS is a nationally representative population-based survey that samples days continuously throughout the year. In 2003-6, 60 674 respondents aged ≥15 years were randomly selected from households that completed the Current Population Survey; 1621 reported seeking medical care for themselves on their survey day. We documented the percentage of the population that reported outpatient visits, the percentage who were accompanied to those visits and by whom, and the mean time spent by patients and their companions, by type of activity, and by age and sex.

Results: After weighting the data to represent the US population, we found that 3.4% of people aged ≥15 years reported traveling, waiting, or receiving services in connection with an outpatient visit on their survey day. The mean time for those who reported the activity was 35 minutes for travel (95% CI 33, 37), 42 minutes of waiting (95% CI 37, 47), and 74 minutes receiving services (95% CI 70, 79). Overall, 39.5% were accompanied, usually by family members. Companions spent a mean of 124 minutes per encounter (95% CI 112, 135). Nearly half of those aged ≥65 years were accompanied, almost always by adults only, suggesting that they may have needed help with transportation, negotiating the healthcare system, or performing cognitive and emotional tasks involved in receiving care.

Conclusion: Outpatient visits are time intensive for American patients and their families: the equivalent of 207 million 40-hour work-weeks each year. Patients and their families spend substantially more time on outpatient visits than the time with the physician reported by the annual National Ambulatory Medical Care Survey. Further research is needed on the components of outpatient visits that do not directly involve physicians. Efforts to improve care should address waiting times and recognize the involvement of family members. The ATUS could provide periodic benchmarks of patient time use as a supplement to other indicators of patient-centered care in the annual National Healthcare Quality Report.


Waiting times and socioeconomic status among elderly Europeans: Evidence from SHARE

Luigi Siciliani & Rossella Verzulli
Health Economics, forthcoming

Waiting times for specialist consultation and non-emergency surgery are often considered an equitable rationing mechanism in the public healthcare sector, because access to care is not based on socioeconomic status. This study tests empirically this claim using data from the Survey of Health, Ageing and Retirement in Europe (SHARE). The sample includes nine European countries: Austria, Denmark, France, Germany, Greece, Italy, the Netherlands, Spain and Sweden. For specialist consultation, we find that individuals with high education experience a reduction in waiting times of 68% in Spain, 67% in Italy and 34% in France (compared with individuals with low education). Individuals with intermediate education report a waiting-time reduction of 74% in Greece (compared with individuals with low education). There is also evidence of a negative and significant association between education and waiting times for non-emergency surgery in Denmark, the Netherlands and Sweden. High education reduces waits by 66, 32 and 48%, respectively. We also find income effects, although generally modest. An increase in income of 10,000 Euro reduces waiting times for specialist consultation by 8% in Germany and waiting times for non-emergency surgery by 26% in Greece. Surprisingly, an increase in income of 10,000 Euro increases waits by 11% in Sweden.

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