Is Medicine an Ivory Tower? Induced Innovation, Technological Opportunity, and For-Profit vs. Non-Profit Innovation

57 Pages Posted: 19 Mar 2008 Last revised: 19 May 2021

See all articles by Jay Bhattacharya

Jay Bhattacharya

Stanford University - Center for Primary Care and Outcomes Research; National Bureau of Economic Research (NBER)

Mikko Packalen

University of Waterloo - Department of Economics

Date Written: March 2008

Abstract

This paper examines whether the composition of medical research responds to changes in disease incidence and research opportunities. The paper also provides new evidence on induced pharmaceutical innovation. In both cases we use the change in the demographic structure of the market (measured by age structure and obesity prevalence) to test the induced innovation hypothesis. Technological opportunity is calculated from estimates of structural productivity parameters. The extent of inventive activity is measured from the MEDLINE database on 16 million biomedical publications. We match these data with data on disease incidence. We show that medical research responds to changes in disease incidence and research opportunities. We also find that pharmaceutical innovation responds to aging- and obesity-induced changes in potential market size.

Suggested Citation

Bhattacharya, Jayanta and Packalen, Mikko, Is Medicine an Ivory Tower? Induced Innovation, Technological Opportunity, and For-Profit vs. Non-Profit Innovation (March 2008). NBER Working Paper No. w13862, Available at SSRN: https://ssrn.com/abstract=1106588

Jayanta Bhattacharya (Contact Author)

Stanford University - Center for Primary Care and Outcomes Research ( email )

Center for Health Policy
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Stanford, CA 94305-6019
United States
650-736-0404 (Phone)
650-723-1919 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

Mikko Packalen

University of Waterloo - Department of Economics ( email )

Waterloo, Ontario N2L 3G1
Canada

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