Medical Innovation and Racial Health Disparities: Evidence from a Breakthrough Treatment

Whether medical innovation exacerbates or reduces racial health disparities remains an open question. We study surfactant replacement therapy (SRT), a life-saving intervention for premature infants with respiratory disorders. Before its approval by the FDA in 1989, premature Black infants were much less likely than their White counterparts to die from respiratory-related causes. Within a few years of FDA approval, the Black-White gap in respiratory-related neonatal mortality had essentially disappeared. Using 1980-2000 vital statistics data and non-respiratory-related mortality as a counterfactual outcome, we find that both Blacks and Whites benefited from the introduction of SRT, but White neonates experienced larger and more immediate reductions in mortality. We estimate that, by 1993, SRT had reduced respiratory-related mortality among White neonates by 46 percent, compared to 30 percent for Black neonates. These results are not explained by differences in health care access, as proxied by socioeconomic status or distance to the nearest neonatal intensive care unit. We conclude that racial differences in fetal pulmonary maturation, rather than barriers to access, likely drove the uneven impact of SRT on neonatal mortality.