NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Is American Health Care Uniquely Inefficient? Evidence from Prescription Drugs

Margaret Kyle, Heidi L. Williams

NBER Working Paper No. 23068
Issued in January 2017
NBER Program(s):Aging, Health Care, Productivity, Innovation, and Entrepreneurship

Alan Garber and Jonathan Skinner (2008) famously conjectured that the US health care system was “uniquely inefficient” relative to other countries. We test this idea using cross-country data on prescription drug sales newly linked with an arguably objective measure of relative therapeutic benefits, or drug quality. Specifically, we investigate how higher and lower quality drugs diffuse in the US relative to Australia, Canada, Switzerland, and the UK. Our tabulations suggest that lower quality drugs diffuse more in the US relative to high quality drugs, compared to each of our four comparison countries – consistent with Garber and Skinner’s conjecture.

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Document Object Identifier (DOI): 10.3386/w23068

Published: Margaret Kyle & Heidi Williams, 2017. "Is American Health Care Uniquely Inefficient? Evidence from Prescription Drugs," American Economic Review, vol 107(5), pages 486-490.

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