Labor Markets in Statistics: The Subject Supply Effect in Medical R&D

Anup Malani and Tomas Philipson

Journal of Human Capital, 2019, vol. 13, issue 2, 293 - 340

Abstract: Medical R&D differs from other R&D because of a unique linkage between output and input markets: potential consumers of existing medical products are also potential subjects in clinical trials required to develop new products. Therefore, a quality increase or price reduction for an existing treatment reduces patients' incentive to participate in trials of new treatments. We label this linkage the "subject supply effect" and provide evidence of it from trials of hepatitis C and AIDS treatments. The subject supply effect has important positive implications for how policies affect the rate of medical R&D and normative implications for whether subjects ought to be compensated for enrolling in clinical trials.

Date: 2019
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