Regulating the Innovators: Approval Costs and Innovation in Medical Technologies

Parker Rogers

No c8s3m, SocArXiv from Center for Open Science

Abstract: How does FDA regulation affect innovation and market concentration? I examine this question by exploiting FDA deregulation events that affected certain medical device types but not others. I use text analysis to gather comprehensive data on medical device innovation, device safety, firm entry, prices, and regulatory changes. My analysis of these data yields three core results. First, these deregulation events significantly increase the quantity and quality of new technologies in affected medical device types relative to control groups. These increases are particularly strong among small and inexperienced firms. Second, these events increase firm entry and lower the prices of medical procedures that use affected medical device types. Third, the rates of serious injuries and deaths attributable to defective devices do not increase measurably after these events. Perhaps counterintuitively, deregulating certain device types lowers adverse event rates significantly, consistent with firms increasing their emphasis on product safety as deregulation exposes them to more litigation.

Date: 2022-11-01
New Economics Papers: this item is included in nep-com, nep-ind, nep-law, nep-reg, nep-sbm and nep-tid
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:c8s3m

DOI: 10.31219/osf.io/c8s3m

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