Labor Markets in Statistics: The Subject Supply Effect in Medical R&D

56 Pages Posted: 4 Mar 2016 Last revised: 23 Apr 2016

See all articles by Anup Malani

Anup Malani

University of Chicago - Law School; University of Chicago Pritzker School of Medicine; Resources for the Future; National Bureau of Economic Research (NBER)

Tomas Philipson

University of Chicago; National Bureau of Economic Research (NBER)

Date Written: March 1, 2016

Abstract

Medical research and development (R&D) differs from other R&D because of a unique linkage between output and input markets for medical products: potential consumers of existing medical products are also potential subjects in clinical trials required to develop new products. Therefore, an increase in the quality or reduction in the price of an existing treatment reduces the incentive of patients to participate in trials of new treatments. We provide evidence of this linkage, which we label the “subject supply effect,” by showing that a breakthrough HIV/AIDs treatment led to a sharp drop in the supply of trial subjects after the introduction of the treatment in 1996. The subject supply effect has important positive implications for how policies such as recent insurance expansions affect the rate of medical R&D and normative implications for whether subjects ought to be compensated for enrolling in clinical trials, an ethically controversial practice.

Keywords: Medical R&D, Research & Development, Health Economics

JEL Classification: I1, I11

Suggested Citation

Malani, Anup and Philipson, Tomas J., Labor Markets in Statistics: The Subject Supply Effect in Medical R&D (March 1, 2016). Becker Friedman Institute for Research in Economics Working Paper No. 2016-03. Available at SSRN: https://ssrn.com/abstract=2740760 or http://dx.doi.org/10.2139/ssrn.2740760

Anup Malani

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
773-702-9602 (Phone)
773-702-0730 (Fax)

HOME PAGE: http://www.law.uchicago.edu/faculty/malani/

University of Chicago Pritzker School of Medicine

Chicago, IL 60637
United States

Resources for the Future

1616 P Street, NW
Washington, DC 20036
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Tomas J. Philipson (Contact Author)

University of Chicago ( email )

Graduate School of Business
1101 East 58th Street
Chicago, 60637

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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