TY - JOUR
T1 - The determinants of the adoption of pharmaceutical innovation
T2 - Evidence from Taiwan
AU - Liu, Ya Ming
AU - Kao Yang, Yea Huei
AU - Hsieh, Chee Ruey
N1 - Funding Information:
We would like to thank Stephen Birch and three anonymous referees for helpful suggestions. Financial support from the National Science Council ( NSC98-2410-H-006-033 and NSC98-2410-H-001-023 ) in Taiwan is gratefully acknowledged.
PY - 2011/3
Y1 - 2011/3
N2 - In recent years, a substantial amount of technological progress in medicine has taken the form of pharmaceutical innovation. This paper uses the launch of a series of new drugs designed for treating type 2 diabetic patients as an example to investigate the determinants that affect the diffusion of new medical technology. Based on prescription-level data that are obtained from the national health insurance program in Taiwan, we find that the probability of prescribing new drugs declines as more competing products enter the pharmaceutical market. Meanwhile, physicians are less likely to prescribe new drugs to treat their patients as the provider market becomes less concentrated. These results suggest that the providers' incentives for cost reduction dominate incentives for quality improvement as markets become more competitive and hence an increase in market competition is associated with a decrease in the diffusion of new drugs. As a result, access to new drugs is not uniform among patients in a country with universal coverage for prescription drugs. An important implication of our study is that profit-seeking behavior among providers can become an access barrier to new medical technology.
AB - In recent years, a substantial amount of technological progress in medicine has taken the form of pharmaceutical innovation. This paper uses the launch of a series of new drugs designed for treating type 2 diabetic patients as an example to investigate the determinants that affect the diffusion of new medical technology. Based on prescription-level data that are obtained from the national health insurance program in Taiwan, we find that the probability of prescribing new drugs declines as more competing products enter the pharmaceutical market. Meanwhile, physicians are less likely to prescribe new drugs to treat their patients as the provider market becomes less concentrated. These results suggest that the providers' incentives for cost reduction dominate incentives for quality improvement as markets become more competitive and hence an increase in market competition is associated with a decrease in the diffusion of new drugs. As a result, access to new drugs is not uniform among patients in a country with universal coverage for prescription drugs. An important implication of our study is that profit-seeking behavior among providers can become an access barrier to new medical technology.
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U2 - 10.1016/j.socscimed.2010.12.027
DO - 10.1016/j.socscimed.2010.12.027
M3 - Article
C2 - 21333432
AN - SCOPUS:79953117559
SN - 0277-9536
VL - 72
SP - 919
EP - 927
JO - Social Science and Medicine
JF - Social Science and Medicine
IS - 6
ER -