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Who Benefits from New Medical Technologies? Estimates of Consumer and Producer Surpluses for Hiv/Aids Drugs

33 Pages Posted: 19 Feb 2006  

Tomas Philipson

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

Anupam B. Jena

Harvard University; National Bureau of Economic Research (NBER)

Date Written: December 2005

Abstract

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

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

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

Anupam B. Jena

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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