The Impact of Medicare Part D on Pharmaceutical R&D

Margaret Blume-Kohout and Neeraj Sood

No 13857, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Recent evidence suggests that Medicare Part D has increased prescription drug use among the elderly, and earlier studies have indicated that increasing market size induces pharmaceutical innovation. This paper assesses the impact of Medicare Part D on pharmaceutical research and development (R&D), using time-series data on (a) the number of drugs in clinical development by therapeutic class, and (b) R&D expenditures by firm. We demonstrate that the passage of Medicare Part D was associated with significantly higher pharmaceutical R&D for drug classes with higher Medicare market share, and for firms specializing in higher-Medicare-share drugs.

JEL-codes: H51 I18 O30 (search for similar items in EconPapers)
Date: 2008-03
New Economics Papers: this item is included in nep-hea, nep-ino, nep-ipr and nep-pr~
Note: EH PR
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Citations: View citations in EconPapers (10)

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