Value of Pharmaceutical Innovation

This dissertation consists of three papers concerning the introduction of new drugs. The first paper investigates the access effects of new drugs, estimating the increase in the number of prescriptions and the number of people taking medications at various drug class levels due to a single new-drug approval. The author finds that more creative drugs (e.g., new chemical entities) have larger and more significant access effects, whereas less creative drugs have no significant effects. The second paper considers the value of pharmaceutical innovations by investigating the drug adoption patterns of atorvastatin among different patient subgroups over time. The author finds that in assessing the value of pharmaceutical innovations, a dynamic approach examining effectiveness over time is preferred to a static approach. In the third paper, the author compares the clinical and access-expansion effects for a systematically chosen list of drugs using claims data and the clinical trials literature. Although most of the drugs studied offer clinical benefits, the effect of new drug introductions on the number of patients treated accounts for a substantial majority of the value created by new drugs.