Understanding incentives in health care.

다국어 초록 (Multilingual Abstract)

Chapter 1 provides a brief overview of the biotechnology pharmaceutical industry, providing both context and motivation for the empirical model estimated in Chapter 2. Chapter 1 includes a discussion of pharmaceutical drug pricing, a historical overview of the industry, as well as a quantitative description of the direct payments physicians in Minnesota received from pharmaceutical firm between 2002--2004.
The second chapter, empirically quantifies how market structure influences the split of producer surplus innovators receive for successful innovation in the biotechnology pharmaceutical industry. I find that pharmaceutical marketing firms' values for adding a new drug to their product portfolio depend on the distribution of the other products marketed in the same physician specialty as the drug, the size of the patient market the drug serves, and the number of physicians in the physician specialty that prescribe the drug. I show how the level of competition in the bidding market for the marketing rights of a successful innovation varies across markets. In particular, when the distribution of marketing rights for products in a physician specialty are concentrated in a single firm, the bargaining position of the innovator is weakened and this effect becomes more severe as the size of the physician specialty increases. The difference between the firm with the highest valuation and the firm with the second highest valuation increases by an average of 2% for every additional 10,000 physicians in a specialty.
In the third chapter, I examine the effect of state legislation restricting physician investment in magnetic resonance imaging (MRI) facilities on the usage and availability of MRI technology. I find that this legislation decreases the number of MRI machines available by 12%. In addition, I find that the legislation has a larger effect on the number of machines available in hospital based facilities than those available in non hospital based facilities. I find the law shifts where procedures are performed from hospital based facilities to non-hospital based facilities, but I do not find conclusive evidence that the law decreases the number of procedures performed in these states. In order to identify these effects, I use data from an MRI census performed from 1992--1998 as well as information on state legislation restricting physician investments in MRI facilities. My results demonstrate that when considering the effect of a law regulating contracts between experts and service providers, the law's impact on ownership patterns should be considered in addition to the law's impact on the availability of technology and the overall level of utilization.