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« Back to Results

Topics in Health Economics

Paper Session

Sunday, Jan. 6, 2019 10:15 AM - 12:15 PM

Atlanta Marriott Marquis, M102
Hosted By: National Economic Association
  • Chair: Sebastian Tello-Trillo, University of Virginia

Active Ingredients: Exploring the Key Factors Affecting the Rising Cost of Developing New Drugs

Sarah J. Fossett
,
Credit Suisse
Phanindra V. Wunnava
,
Middlebury College & IZA

Abstract

What makes prescription drugs cost so much? The media and Congress say it is corporate greed, while pharmaceutical firms blame federal regulations and an expensive drug development process. This study focuses on R & D expenditures at global pharmaceutical firms and explores the driving factors behind what makes R&D for prescription drugs so costly. By combining variables that represent the news
media's claims (i.e. CEO compensation) and the pharmaceutical firms' rebuttals (i.e. late-stage drug development), this study attempts to add empirical evidence to the growing debate surrounding the high and rising cost of prescription drugs. The results suggest that there is some truth to both sides of the argument- specifically; both CEO compensation and phase II development are positively correlated with R & D expenditures. However, we have reason to believe that CEO compensation is more of an indicator of business strategy than greed. Finally, this study proposes possible research extensions for continued study.

States Decision to Expand Medicaid and the Treatment of Substance Use Disorders

Jevay Grooms
,
Howard University
Alberto Ortega
,
Whitman College

Abstract

As the opioid epidemic continues to cripple communities and disrupt our country, identifying and understanding state and federal policies which have helped alleviate the burden of the epidemic is imperative. In 2010, the Obama Administration passed the Patient Protection and Affordable Care Act (ACA) which expanded health coverage and services offered. Prior to the ACA treatment for substance use disorders were not included in all medical coverage, as of 2014 the ACA mandated that such treatment be included in the ten essential health benefits (EHBs). In this paper, we use a difference-in-difference econometric model to exploit the timing of the ACA to estimate the impact on access to substance use disorder treatment facilities. We find the expansion of coverage and benefits resulted in an 83 percent increase in Medicaid admissions into substance abuse treatment facilities. Simultaneously it resulted in a 32 percent decrease in uninsured admissions. These results are consistent across substance abuse type race and gender. We also consider supply-side responses to treatment admissions resulting from the ACA. We find no effect of the ACA on the number of facilities that offer services for substance use disorders. This includes the number of facilities that accept the Medicaid as a form of payment, the number that do not accept the Medicaid, as well the number of facilities offering free services. We also find no effect of the ACA on the average number of days a client waited before their first clinical service is provided.

How Extended Family Health Issues Influence Household Portfolio Allocations

Vicki Bogan
,
Cornell University
Jermaine Toney
,
Cornell University

Abstract

Growing research links household financial decisions and health status within the nuclear family. However, the focus on the nuclear family could underestimate the health-wealth effect. Previous research finds that household wealth can decline when an extended family member experiences a physical health shock. We expand current economic modeling to investigate the connection between portfolio allocations and mental health among siblings. Mental health conditions affect nearly one fourth (23%) of the adult U.S. population. We hypothesize that mental health issues outside of the nuclear family unit are a unique contributor to household portfolio allocation decisions. We use panel data and find significant effects of having at least one sibling with a mental health issue on household financial decisions. The effects include decreased probability of risky asset ownership (stocks, mutual funds), decreased risky assets as a share of financial assets, and decreased total amount of risky asset holdings.

Bank Failures and Deaths: The Social Costs of Local Credit Market Frictions

Salvador Contreras
,
University of Texas-Rio Grande Valley
Amit Ghosh
,
Illinois Wesleyan University
Victoria A. Perez
,
Indiana University

Abstract

This paper uses a Regression Discontinuity design to estimate the effect of local financial market frictions on stress and non-stress correlated mortality rates. Exploiting variations in economic conditions at the county level from exposure to branch failures we find that circulatory and respiratory deaths per hundred thousand are temporarily reduced. We find that the three years past bank failure episode circulatory and respiratory mortality rates increase on average 1.5 percent. This roughly translates to 2
deaths per 100,000 or about 3 deaths to the average impacted county. In addition, we find drug/alcohol related deaths increase by 5 percent. We find weak, if any evidence, that deaths related to neoplasms, blood, infection, eye, genitourinary system, and other rare diseases as well as motor vehicle deaths are affected by economic shocks.

Access or Acceptability? The Impact of LARC-Specific Attributes on Method Choice

Lorissa Pagán
,
University of North Carolina-Greensboro

Abstract

It has been estimated that 45% of pregnancies in the United States are unplanned, with 41% of these pregnancies occurring due to incorrect or inconsistent contraceptive use. Long-acting reversible contraceptives (LARCs) do not rely on user compliance and have very low failure rates, yet LARCs are used by less than 16% of contracepting women in the United States. Unlike other reversible methods, LARCs (which include intrauterine devices and the contraceptive implant) are physical devices and thus have unique barriers to access, such as a lack of providers trained LARC provision or potentially high out-of-pocket costs.

Due to their low failure rates and reversibility, increasing LARC access has been advocated as a way to reduce unplanned pregnancies. It is possible that some women find LARC methods as unacceptable contraceptive alternatives regardless of access, as women balance more than effectiveness and monetary costs when choosing a contraceptive method. In this paper I estimate a model of contraceptive choice and find that LARC-related attributes such as being a physical device and having a long-lasting duration of effectiveness may be undesirable. Thus, while increasing LARC access is important, it may also be necessary to develop new contraceptive options that better suit women's needs.
Discussant(s)
Sebastian Tello-Trillo
,
University of Virginia
Monica Garcia-Perez
,
St. Cloud State University
Linda Loubert
,
Morgan State University
Nicholas Hill
,
Jackson State University
Joaquín Alfredo-Angel Rubalcaba
,
University of North Carolina-Chapel Hill
JEL Classifications
  • I1 - Health
  • H0 - General