Pharmaceuticals and Digital Health: Evidence from Data-driven Insights on the Insulin Market

Léa Bignon
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Léa Bignon: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: Digital health technologies, such as Continuous Glucose Monitors (CGMs), are transforming the availability of patient-level data, potentially influencing other healthcare markets. This paper examines how CGMs influence the insulin market, shedding light on the impact of digital health technologies on pharmaceutical demand, pricing, and innovation incentives. I develop and estimate a tractable model of supply and demand for insulin, embedding: (i) patient specific learning about treatment performance through CGMs, (ii) physician level learning about new insulin products from patient experiences, and (iii) price bargaining between pharmaceutical companies and the regulator. Using medical claims data from France, I find that CGMs' patient-specific information steered insulin demand toward newer products, with limited spillover to nonusers. Manufacturers of drugs that benefited from higher perceived quality could negotiate higher prices. My findings indicate that introducing these newly observable product attributes into pharmaceutical demand shifts the relative profitability of drug innovation strategies, thereby shaping the direction of future pharmaceutical innovation.

Date: 2026-05-06
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