NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Health Policy and Technological Change: Evidence from the Vaccine Industry

Amy Finkelstein

NBER Working Paper No. 9460
Issued in January 2003
NBER Program(s):   HC   PR   PE

Rapid technological progress has been a defining feature of the medical sector over the last century, yet we know little about the determinants of the development of these new technologies. This paper examines whether and to what extent the demand-side incentives embodied in health policy affect the rate of technological change in the medical sector. Specifically, I estimate the effect on vaccine investment of discrete changes in health policy that increased the return to developing vaccines against specific diseases. I present robust evidence of an increase in vaccine investment associated with the increase in demand-side investment incentives. The induced investment represents 70% of the total subsequent vaccine investment in the affected diseases, and suggests that a $1 increase in annual market revenue for a vaccine is associated with 5 to 6 cents of additional investment in that vaccine's development. However, this response appears limited to the last stage of the R&D pipeline clinical trials which represents the commercialization of existing technology; I am unable to detect evidence of an investment response at earlier stages as measured by pre-clinical trials or patent filings that represent more of an attempt to develop fundamentally new technologies. Finally, I present suggestive evidence that the potential dynamic health benefits from the technological change induced by the policies are at least as large as the static health benefits from the policies' primary aim of increasing vaccination rates with the existing technology. These results suggest that the near-exclusive focus on static health benefits in empirical evaluations of health policies is inadequate.

download in pdf format
   (532 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

This paper is available as PDF (532 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w9460

Users who downloaded this paper also downloaded these:
Kremer and Snyder w9833 Why Are Drugs More Profitable Than Vaccines?
Kremer w7716 Creating Markets for New Vaccines Part I: Rationale
Danzon and Pereira w17205 Vaccine Supply: Effects Of Regulation And Competition
Kremer w7717 Creating Markets for New Vaccines Part II: Design Issues
Berndt, Glennerster, Kremer, Lee, Levine, Weizsacker, and Williams w11288 Advanced Purchase Commitments for a Malaria Vaccine: Estimating Costs and Effectiveness
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us