Napsterizing Pharmaceuticals: Access, Innovation, and Consumer Welfare
We analyze the effects of a hypothetical change from the status quo with patent protection on pharmaceuticals to a world in which all patent rights on both existing and future branded drugs would be eliminated.
Our analysis takes into account stylized facts concerning the nature of competition between branded and generic competition, the value of the flow of potential new drugs, the effective patent life under the existing Hatch-Waxman framework, and, most critically, the essential features of pharmaceutical insurance coverage whereby consumers pay relatively low marginal prices (copayments) for their prescriptions.
Our calibration of a simple model indicates that the costs of Napsterizing pharmaceuticals exceed the benefits by a ratio of almost 3 to 1. The method and analysis are relevant beyond the pharmaceutical industry, applying to any industry in which the incentive to investments in intellectual property are protected by patents.
The Political Economy of Workplace Smoking Bans
Economic research documents a strong negative association between workplace smoking bans and smoking. This association suggests that bans are an effective policy in regulating smoking. While certainly plausible, the underlying causal mechanism generating these associations has not been fully explored. This paper extends the literature by examining whether workplace smoking bans reflect worker sorting, political economy effects, or social interactions, rather than causal effects of the bans on smoking.
Using data from the National Health Interview Surveys, I estimate models of the likelihood an individual worker works where smoking is banned. Ban coverage is more likely among never smokers and long-term former smokers, indicating that smoking status decisions precede ban coverage, often by a considerable period of time. Ban coverage is also more likely the larger the aggregate proportion of never and former smokers in the workforce, consistent with social interaction models. The observed association between smoking status and workplace smoking bans thus as much reflects the underlying preferences of employers, workers and their social environment as it does any causal effect of the bans on smoking.
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