Does Misery Love Company? Evidence from Pharmaceutical Markets Before and after the Orphan Drug Act

31 Pages Posted: 9 Jun 2003 Last revised: 3 Nov 2010

See all articles by Frank R. Lichtenberg

Frank R. Lichtenberg

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Joel Waldfogel

University of Minnesota - Twin Cities - Carlson School of Management; National Bureau of Economic Research (NBER); University of Minnesota - Twin Cities - Department of Economics

Date Written: June 2003

Abstract

With substantial fixed costs of drug development, more common conditions can support more products. If additional pharmaceutical products are beneficial, they will attract greater consumption and promote better health, e.g. greater longevity. We ask how market size measured by condition prevalence affects consumption and longevity. We document in condition cross sections that both the tendency to use a drug and longevity are higher for individuals with more prevalent conditions. We also make use of the 1983 Orphan Drug Act (ODA), which promoted development of drugs for the treatment of rare conditions. Longevity and drug use have grown more quickly for persons with rare diseases and even more quickly for persons with conditions with substantial orphan drug use.

Suggested Citation

Lichtenberg, Frank R. and Waldfogel, Joel, Does Misery Love Company? Evidence from Pharmaceutical Markets Before and after the Orphan Drug Act (June 2003). NBER Working Paper No. w9750. Available at SSRN: https://ssrn.com/abstract=414248

Frank R. Lichtenberg (Contact Author)

Columbia Business School - Finance and Economics ( email )

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National Bureau of Economic Research (NBER)

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CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Joel Waldfogel

University of Minnesota - Twin Cities - Carlson School of Management ( email )

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National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
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United States

University of Minnesota - Twin Cities - Department of Economics ( email )

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Minneapolis, MN 55455
United States

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