Essays on the Economics of Health Care and Innovation

Abstract

In this dissertation, I use tools from economics to study policies that affect patient access in biopharmaceutical markets. In Chapter 1, I analyze how hospitals and health systems respond to the 340B Drug Pricing Program, a US federal policy that requires biopharmaceutical companies to give discounts on prescription drugs to certain hospitals. I show that only hospitals in integrated health systems increase billing for cancer drugs in response to 340B participation and provide additional evidence that this is related to restructuring of relationships among system providers. In Chapter 2, my coauthors and I explore how patients respond to FDA approval of new uses for previously approved drugs, which we term follow-on indications. We show that patients respond to approval by increasing utilization even though physicians were already free to prescribe medications for the newly approved uses. Patients respond more strongly to indication approvals that are novel, including approvals of indications for new diseases or disease areas. These results point to follow-on indication approvals substantially reducing uncertainty about the value of medications and effectively increasing patient access. Lastly, in Chapter 3, I consider the impacts of the Orphan Drug Credit, a tax incentive for R&D spending on clinical rare disease drug development. I find that reducing the credit resulted in a modest decline in employment of US sites for rare disease clinical trials but no significant reduction in clinical trials for rare diseases.