Value of Pharmaceutical Innovation

The Access Effects, Diffusion Process, and Health Effects of New Drugs

by Ze Cong

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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.

Table of Contents

  • Chapter One

    The Access Effects of New Drugs in U.S.

  • Chapter Two

    Diffusion Process of New Drugs among Patient Subgroups

  • Chapter Three

    Health and Access Effects of New Drugs

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This document was submitted as a dissertation in March 2009 in partial fulfillment of the requirements of the doctoral degree in public policy analysis at the Pardee RAND Graduate School. The faculty committee that supervised and approved the dissertation consisted of Neeraj Sood (Chair), Darius Lakdawalla, and Pierre-Carl Michaud.

This report is part of the RAND Corporation Dissertation series. Pardee RAND dissertations are produced by graduate fellows of the Pardee RAND Graduate School, the world's leading producer of Ph.D.'s in policy analysis. The dissertations are supervised, reviewed, and approved by a Pardee RAND faculty committee overseeing each dissertation.

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