33 Pages Posted: 19 Feb 2006
Date Written: December 2005
The social value of an innovation is comprised of the value to consumers and the value to innovators. We estimate that for the HIV/AIDS therapies that entered the market from the late 1980's onwards, innovators appropriated only 5% of the social surplus arising from these new technologies. Despite the high annual costs of these drugs to patients, the low share of social surplus going to innovators raises concerns about advocating cost-effectiveness criteria that would further reduce this share, and hence further reduce incentives for innovation.
Suggested Citation: Suggested Citation
Philipson, Tomas and Jena, Anupam B., Who Benefits from New Medical Technologies? Estimates of Consumer and Producer Surpluses for Hiv/Aids Drugs (December 2005). NBER Working Paper No. w11810. Available at SSRN: https://ssrn.com/abstract=875686