Essays on Innovation and Digitization in Health Care Markets

Wang, Lucy Xiaolu

Essays on Innovation and Digitization in Health Care Markets

Abstract

My dissertation consists of three essays on the causes and consequences of innovation and digitization in health care markets. The first essay sheds light on institutions affecting technological diffusion and innovation in a global setting, and the second and third essays analyze the benefit and cost of digitization in health care markets within the US context. In addition, I include a technical memo I wrote about patent classification systems. The first essay studies the impact of the first joint licensing platform for patented drugs, the Medicines Patent Pool, on global drug diffusion and innovation. The pool allows generic firms worldwide to license drug bundles cheaply and conveniently for sales in a set of developing countries. I construct a novel dataset from licensing contracts, public procurement, clinical trials, and drug approvals. Using difference-in-differences methods, I find that the pool leads to substantial increases in the generic supply of drugs purchased. In addition, there are positive responses in R&D inputs and outputs. Finally, I estimate a simple structural model to quantify welfare gains. I find the pool balances diffusion and innovation cost-effectively. The second essay investigates digital solutions to the opioid crisis. In response to the opioid crisis, each US state has implemented a prescription drug monitoring program (PDMP) to collect data on controlled substances prescribed and dispensed in the state. I study whether health information technology (HIT) complements PDMPs to reduce opioid-related mortality and morbidity. I collect data on state policies that integrate PDMP with HIT and facilitate interstate data sharing. Using difference-in-differences models, I find that PDMP-HIT integration policies reduce opioid-related mortality and morbidity. The reductions in inpatient morbidity are substantial in states that established integration without ever mandating PDMP access. The impacts are strongest for the most vulnerable groups—middle-age, low- to middle-income patients, and publicly insured. I find suggestive evidence that interstate data sharing further complements integration. The total benefits of integration far exceed the costs. The third essay (co-authored with Jordan Epstein, Sean Nicholson, Katherine Hempstead, and Sam Asin) estimates potential cost savings if consumers are willing to shop around for imaging services and take advantage of both insurer-negotiated prices and cash price options. We use price data from five private health insurers and cash prices across 142 imaging facilities in the San Francisco Bay area. Across different simulations, we estimate that patients could save 11–22% of their insurer’s in-network prices by paying cash and could save even more (45–64%) if patients choose the lowest in-network or cash prices for an imaging service in the Bay area. The technical memo provides an overview of the major patent classification systems and the basic ideas behind the categorization of patent classes. Patent classification systems and upper-level groupings have been widely used for research and entrepreneurial purposes but are insufficiently documented. I highlight recent institutional changes that disproportionately affect patents in specific categories and alternative categorizations used in the patent examination process. Finally, I update the National Bureau of Economic Research patent technological categorization based on the latest U.S. patent classification.

Description

196 pages

Date Issued

2020-05

Committee Chair

Waldman, Michael
Nicholson, Sean

Committee Member

Forman, Christopher
Lovenheim, Michael

Degree Discipline

Economics

Degree Name

Ph. D., Economics

Degree Level

Doctor of Philosophy

Rights

Attribution 4.0 International

Rights URI

https://creativecommons.org/licenses/by/4.0/

Types

dissertation or thesis