Regulations, Bans and Markets: Implications for Pharmaceuticals
While prescription drug spending has been slowing down over the last decade, primarily attributed to the increased use of generic drugs, it still accounts for approximately 15% of the health care costs. In this session, we present three papers on some overlooked aspects of regulatory and market-based factors that influence approval and disapproval of drugs, as well as subsequent drug use and spending. The first paper investigates the factors associated with Food and Drug Administration (FDA) approval times of new drugs, primarily focusing on the characteristics of the novel therapeutics. The second paper provides the first evidence on an FDA ban of certain asthma inhalers because they were harmful to the environment, leaving in the market only branded alternatives. The third paper studies the short-run and long-run consequences of drug advertising on use of drugs and subsequent health consequences.