Insurance Design and Pharmaceutical Innovation
Name
kim-skim20-SM15MR-sloan-2021-thesis.pdf
Description
Thesis PDF
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716.47 KB
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Adobe PDF
Checksum (MD5)
0906f2c8fa9f92f910faba33c1d018b2
Author(s)
Kim, Soomi
Advisor(s)
Li, Danielle
Date Issued
June 2021
Publisher
Massachusetts Institute of Technology
Abstract
This paper studies how insurance coverage policies impact pharmaceutical innovation. In the United States, most patients obtain prescription drugs through insurance plans administered by Pharmacy Benefit Managers (PBMs). Beginning in 2012, PBMs began refusing to provide coverage for many newly approved drugs when cheaper alternatives were available. We show that this policy reshaped upstream pharmaceutical R&D, shifting investments away from therapeutic classes at greater risk of exclusion. This move translated into a relative decline in the development of drug candidates that appear more incremental: that is, those in drug classes with more pre-existing therapies and with less scientifically novel research.
MIT Department
Sloan School of Management
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