Abstract

http://ssrn.com/abstract=1374631
 
 

References (49)



 
 

Citations (1)



 


 



An Ounce of Prevention or a Pound of Cure? Short- and Long-Run Effects of Pharmaceutical Patents on U.S. Health Care Expenditures


Hilary S. Johnson


Colorado College - Department of Economics and Business

Daniel K. N. Johnson


Colorado College - Department of Economics and Business

April 7, 2009


Abstract:     
This study examines the relationship between pharmaceutical R&D and health care expenditures, distinguishing between the short- and long-run impacts. To measure these relationships quantitatively, we focus on patents as a key factor driving the costs of pharmaceuticals, and develop a structured vector autoregressive (SVAR) model to measure the social rate of return to pharmaceutical research as protected by patents. We conclude with unambiguous results that pharmaceutical patents are not correlated with higher short-run prices in any measure of medical costs. They are associated with higher long-run prices in pharmaceuticals themselves, but with lower long-run prices in the aggregate medical sector which includes pharmaceuticals as a component part. Further, the TRIPS Agreement and Hatch-Waxman Act to enable generic competition have both been demonstrably effective at lowering prices across the spectrum of medical sector prices. We conclude that pharmaceutical patents may be economically medicinal themselves, acting as the 'ounce of prevention' that saves a 'pound of cure', the cure which would come in the form of even higher costs elsewhere in the medical sector.

Number of Pages in PDF File: 22

Keywords: health, inflation, price, pharma, patent, VAR, structured vector autoregression, TRIPS, Hatch-Waxman, cost, IP, hospital, drug

JEL Classification: H51, I1, I10, I11, I18, O32, O34, O38, E31, C32

working papers series


Download This Paper

Date posted: April 9, 2009 ; Last revised: May 24, 2010

Suggested Citation

Johnson, Hilary S. and Johnson, Daniel K. N., An Ounce of Prevention or a Pound of Cure? Short- and Long-Run Effects of Pharmaceutical Patents on U.S. Health Care Expenditures (April 7, 2009). Available at SSRN: http://ssrn.com/abstract=1374631 or http://dx.doi.org/10.2139/ssrn.1374631

Contact Information

Hilary S. Johnson
Colorado College - Department of Economics and Business ( email )
Colorado Springs, CO 80903
United States
Daniel Kent Neil Johnson (Contact Author)
Colorado College - Department of Economics and Business ( email )
Colorado Springs, CO 80903
United States
719-389-6654 (Phone)
719-389-6927 (Fax)
HOME PAGE: http://faculty1.coloradocollege.edu/~djohnson
Feedback to SSRN


Paper statistics
Abstract Views: 682
Downloads: 107
Download Rank: 149,517
References:  49
Citations:  1
Paper comments
No comments have been made on this paper

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.203 seconds