Do Insurance Policies Increase Incentives to Innovate? A Look at Medicare Part D’s Effects on Drug Patenting Activity

insuranceandinnovationposter

Understanding the effects of insurance changes on pharmaceutical innovation can highlight downstream side-effects of government policy. This paper expands upon this body of empirical research by assessing the impact of Medicare Part D (one of the most substantial expansions of public health insurance coverage in U.S. history) on pharmaceutical innovation for drugs treating diseases predominantly affecting the elderly. Using data from the U.S. Patent & Trademark Office (USPTO) on pharmaceutical patenting activities of 40 therapeutic classes and controlling for expected market size, I employ a difference-in-differences analysis to show that the announcement of Medicare Part D increases drug innovation for therapeutic classes affecting elderly populations relative to those affecting younger populations, but that those effects are transient. 

KEY FIGURES & TABLES:

 
Screen Shot 2020-12-15 at 11.22.09 AM.png
Screen Shot 2020-12-15 at 11.21.35 AM.png
Screen Shot 2020-12-15 at 11.20.40 AM.png
Screen Shot 2020-12-15 at 11.22.42 AM.png
 

CONTACT ME to request full paper

Cindy Shen2021