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Forum for Health Economics & Policy

Editor-in-Chief: Goldman, Dana

2 Issues per year

CiteScore 2017: 0.53

SCImago Journal Rank (SJR) 2017: 0.425
Source Normalized Impact per Paper (SNIP) 2017: 0.297

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Insurance and Incentives for Medical Innovation

Alan M Garber / Charles I. Jones / Paul Romer
Published Online: 2006-03-29 | DOI: https://doi.org/10.2202/1558-9544.1006

This paper studies the interactions between health insurance and the incentives for innovation. Although we focus on pharmaceutical innovation, our discussion applies to other industries producing novel technologies for sale in markets with subsidized demand. Standard results in the growth and productivity literatures suggest that firms in many industries may possess inadequate incentives to innovate. Standard results in the health literature suggest that health insurance leads to the overutilization of health care. Our study of innovation in the pharmaceutical industry emphasizes the interaction of these incentives. Because of the large subsidies to demand from health insurance, limits on the lifetime of patents and possibly limits on monopoly pricing may be necessary to ensure that pharmaceutical companies do not possess excess incentives for innovation.

Keywords: health insurance; incentives; innovation

About the article

Published Online: 2006-03-29

Citation Information: Forum for Health Economics & Policy, Volume 9, Issue 2, ISSN (Online) 1558-9544, DOI: https://doi.org/10.2202/1558-9544.1006.

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