Gosia Majewska will defend her thesis on Friday 23 June at 16:00 (Auditorium 3 and zoom)
«Essays on the Industrial Organization of Pharmaceutical Markets »
Supervisor: Professor Pierre DUBOIS
To attend the conference, please contact the secretariat Christelle Fotso Tatchum
Memberships are:
- Pierre Dubois : Professor, UT Capitole, TSE Supervisor
- Bruno Jullien : CNRS, TSE, president
- Mathias Reynaert : Professor UT Capitole TSE, Examinator
- Laura Grigolon : Professor assistant, University of Manheim, examinatrice
- Darius Lakdawalla :Professor, University of Southern California, rapporteur
- Franck Verboven : Professor, University of KU Leuven, rapporteur
Abstract :
Pharmaceuticals play an increasingly important role in modern medicine. This means that patients rely on pharmaceutical firms to develop and supply medicines at an accessible price. In my thesis I study various aspects of pharmaceutical markets, from innovation and bringing new products to the market, the effects of changes in market structure on prices and the interaction of regulated prices and the incidence of shortages. While the research presented in my thesis is fully empirical, each chapter employs different techniques, adapting to the problem analyzed. I use a dynamic model to study innovation incentives, a demand and supply model to simulate a merger and develop an algorithm to identify drug shortages from sales data.
The first chapter, Incentivizing Novelty in Antibiotic Development, provides an estimate an estimate of the effectiveness of the existing innovation incentives for the development of new antibiotics. The phenomenon of antimicrobial resistance, by which the existing antibiotics become ineffective over time, creates the need to develop new antibiotics. At the same time, policies necessary to slow down the emergence of resistance disincentivize the industry’s innovative activity in this market by limiting the consumption of the effective drugs. I find that the additional incentives in place since 2012 can be expected to increase the number of new drugs entering this market over a 20 year period by 20-25%. This effect is mostly driven by funding given to innovators during the development process, and, to a smaller extent, by molecules already in development repurposed as antibacterials in response to a policy extending their market exclusivity period.
In the second chapter, Mergers and Advertising in the Pharmaceutical Industry, coauthored with Pierre Dubois, we study the effects of changes in the market structure on prices and advertising spending. The analysis focuses on the mergers of firms competing in narrowly defined pharmaceutical markets. We find that these mergers are associated with a subsequent increase in the prices of both the merging firms’ products and their competitors, and with a decrease in advertising spending. In a case study looking at the effects of the 2009 Pfizer-Wyeth merger in an antimicrobial market, we estimate a random coefficients demand and supply model to disentangle the effects on prices, profits and consumer surplus driven by the change in market concentration and the change in advertising.
The last chapter, Drug Shortages: Empirical Evidence from France, coauthored with Pierre Dubois and Valentina Reig, studies the problem of shortages on the pharmaceutical market. First, we develop a simple methodology to identify drug shortages from drug sales data, which depends on estimating demand and defining a volume threshold over which shortages are less probable. The demand estimate allows us to know what is the magnitude of a shortage when it happens. We use our estimates to study the determinants of shortages, with a particular focus on local and international prices. In the French context, we find that lower French prices increase the likelihood and magnitude of shortages in France. Higher prices in the UK seem to have positive spillover effects on reducing the likelihood of shortages, but a negative one when shortages happen and there is competition for scarce resources internationally. Finally, we provide evidence on the heterogeneous effects of shortage reductions achievable through higher regulated prices in France.
