nep-hea New Economics Papers
on Health Economics
Issue of 2008‒05‒31
thirteen papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Sales Growth of New Pharmaceuticals Across the Globe: The Role of Regulatory Regimes By Stremersch, S.; Lemmens, A.
  2. The Determinants of Pricing in Pharmaceuticals: Are U.S. prices really so high? By Antonio Cabrales; Sergi Jiménez-Martín
  3. Multimarket Contact in Pharmaceutical Markets By Javier Coronado; Sergi Jiménez Martín; Pedro L. Marín
  4. Income and Body Mass Index in Europe By Jaume Garcia; Climent Quintana
  5. Policy Analysis in the Health-Services Market: Accounting for Quality and Quantity By Bernard Fortin; Nicolas Jacquemet; Bruce Shearer
  6. Obesity and Developmental Functioning Among Children Aged 2-4 Years By John Cawley; C. Katharina Spiess
  7. Is the Obesity Epidemic a Public Health Problem? A Decade of Research on the Economics of Obesity By Tomas Philipson; Richard Posner
  8. Air Quality and Early-Life Mortality: Evidence from Indonesia's Wildfires By Seema Jayachandran
  9. Moving Towards more Sustainable Healthcare Financing in Germany By Nicola Brandt
  10. Socio-economic differences in suicide risk vary by sex : A population-based case-control study of 18-65 year olds in Denmark By Antonio Rodríguez; Sunny Collings; Ping Qin
  11. Creating Two Levels of Healthcare By Claire Finn; Niamh Hardiman
  12. The Determinants of Self-Rated Health in the Republic of Ireland Further Evidence and Future Directions By Liam Delaney; Colm Harmon; Cecily Kelleher; Caroline Kenny
  13. Big and Tall Parents do not Have More Sons By Kevin Denny

  1. By: Stremersch, S.; Lemmens, A. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Prior marketing literature has overlooked the role of regulatory regimes in explaining international sales growth of new products. This paper addresses this gap in the context of new pharmaceuticals (15 new molecules in 34 countries) and sheds light on the effect regulatory regimes have on new drug sales across the globe. Based on a time-varying coefficient model, we find that differences in regulation substantially contribute to cross-country variation in sales. One of the regulatory constraints investigated, i.e. manufacturer price controls, has a positive effect on drug sales. The other forms of regulation such as restrictions of physician prescription budgets and the prohibition of direct-to-consumer advertising tend to hurt sales. The effect of manufacturer price controls is similar for newly launched and mature drugs. In contrast, regulations on physician prescription budget and direct-to-consumer advertising have a differential effect for newly launched and mature drugs. While the former hurts mature drugs more, the latter has a larger effect on newly launched drugs. In addition to these regulatory effects, we find that national culture, economic wealth, introduction timing, lagged sales and competition, also affect drug sales. Our findings may be used as input by managers for international launch and sales decisions. They may also be used by public policy administrators to compare drug sales in their country to other countries and to assess the role of regulatory regimes therein.
    Keywords: international new product growth;drug;pharmaceutical;regulation;culture;economics;timevarying effects;penalized splines
    Date: 2008–05–15
  2. By: Antonio Cabrales; Sergi Jiménez-Martín
    Abstract: This paper studies price determination in pharmaceutical markets using data for 25 countries, six years and a comprehensive list of products from the MIDAS IMS database. A key finding is that the U.S. has prices that are not significantly higher than those of countries with similar income levels, specially those that are "lightly regulated". More importantly, price differences to the US levels increase for "branded" or innovative products, and decrease, regardless of the level of regulation for mature or widely diffused molecules. In addition, the nationality of the producer appears to have a small and often in significant impact on prices. We have constructed a theoretical model that accounts for all these findings simultaneously. One interesting aspect of the model is that it shows that reference pricing confers a degree of protection against government intervention. Thus, there is a sense in which a reference price (or similar) policy in one country becomes a “commitment device to avoid lowering price in another one.
    Date: 2008–05
  3. By: Javier Coronado; Sergi Jiménez Martín; Pedro L. Marín
    Abstract: Multimarket rivalry theory predicts that firms engaged in price competition in several markets might find it optimal to redistribute market power from more collusive markets to more competitive instances. Price regulation is shown to affect this relation in a non-monotonic way. Mild or low price regulation may encourage further market power redistribution, whereas stronger price controls change the result to the point of making it irrelevant. We use data from the Pharmaceutical industry for nine OECD countries which are known to place different levels of price controls. We find evidence of the redistribution effect and the interaction with price regulations when considering contacts between chemically equivalent products; however, widening the contact dimension to consider interactions among substitute therapies make the result less transparent. We also find some evidence of the expected interaction between price controls and the redistribution effect driven by the multi-market structure of the industry.
    Date: 2008–05
  4. By: Jaume Garcia; Climent Quintana
    Abstract: The problem of obesity is alarming public health authorities around the world. Therefore, it is important to study its determinants. In this paper we explore the empirical relationship between household income and body mass index (BMI) in nine European Union countries. Our findings suggest that the association is negative for women, but we find no statistically significant relationship for men. However, we show that the different relationship for men and women appears to be driven by the negative relationship for women between BMI and individual income from work. We tentatively conclude that the negative relationship between household income and BMI for women may simply be capturing the wage penalty that obese women suffer in the labor market.
    Date: 2008–05
  5. By: Bernard Fortin; Nicolas Jacquemet; Bruce Shearer
    Abstract: We provide a theoretical and empirical framework for evaluating the effects of policy reforms on physician labor supply. We argue that any policy evaluation must account for both the quality and the quantity of services provided. The introduction of quality into the analysis has implications for both the theoretical and empirical analysis of labor supply, and consequently policy evaluation. In particular, endogenous quality choices introduce non-linearities into the budget constraint since the marginal return to an hour of work depends on the quality of services provided. We illustrate by considering a particular example: the recent reform in compensation contracts for specialist physicians in the province of Quebec (Canada). Prior to 1999, most Quebec specialist physicians were paid fee-for-service contracts; they received a piece rate for each clinical service provided. In 1999, the government introduced a mixed remuneration system, under which physicians received a base (half-daily or daily) wage, independent of services provided, and a reduced fee-for-service. Moreover, the government allowed physicians to choose their contract. We derive theoretical results for the effect of the reform on the quantity and quality of services supplied by analyzing "local" prices and virtual income. We propose discretizing the choice set as an empirical approach to policy evaluation in the presence of non-linear budget constraints.
    Keywords: Health production, Quality of health services, Discretized models
    JEL: I12 D11 C25
    Date: 2008
  6. By: John Cawley; C. Katharina Spiess
    Abstract: In developed countries, obesity tends to be associated with worse labor market outcomes. One possible reason is that obesity leads to less human capital formation early in life. This paper investigates the association between obesity and the developmental functioning of children at younger ages (2-4 years) than ever previously examined. Data from the German Socio-Economic Panel Study are used to estimate models of developmental functioning in four critical areas (verbal skills, activities of daily living, motor skills, and social skills) as a function of various measures of weight (including BMI and obesity status) controlling for various child and family characteristics. The findings indicate that, among boys, obesity is a significant risk factor for lagged development in verbal skills, social skills, and activities of daily living. Among girls, weight generally does not have a statistically significant association with these developmental outcomes. Further investigations show that the correlations exist even for those preschool children who spend no time in day care, which implies that the correlation between obesity and developmental functioning cannot be due solely to discrimination by teachers, classmates, or day care providers.
    JEL: I1 I2 J13 J24
    Date: 2008–05
  7. By: Tomas Philipson; Richard Posner
    Abstract: The world-wide and ongoing rise in obesity has generated enormous popular interest and policy concern in developing countries, where it is rapidly becoming the major public health problem facing such nations. As a consequence, there has been a rapidly growing field of economic analysis of the causes and consequences of this phenomenon. This paper discusses some of the central themes of this decade long research program, aiming at synthesizing the different strands of the literature, and to point to future research that seems particularly productive.
    JEL: I18
    Date: 2008–05
  8. By: Seema Jayachandran
    Abstract: Smoke from massive wildfires blanketed Indonesia in late 1997. This paper examines the impact this air pollution (particulate matter) had on fetal, infant, and child mortality. Exploiting the sharp timing and spatial patterns of the pollution and inferring deaths from "missing children" in the 2000 Indonesian Census, I find that the pollution led to 15,600 missing children in Indonesia (1.2% of the affected birth cohorts). Prenatal exposure to pollution largely drives the result. The effect size is much larger in poorer areas, suggesting that differential effects of pollution contribute to the socioeconomic gradient in health.
    JEL: I12 O1 Q52 Q53 Q56
    Date: 2008–05
  9. By: Nicola Brandt
    Abstract: The aim of the recent healthcare reform was to increase the sustainability of healthcare finances, by reducing its negative impact on employment and increasing cost-effectiveness via enhanced competition. Higher budget contributions will help decouple healthcare finances from labour income a bit, if and once they materialise. An improved risk adjustment between insurers could reduce incentives for risk selection, raising chances for competition to lead to more cost-effectiveness instead. However, the segmentation of the healthcare system in a private and a social insurance market will continue to pose equity and efficiency problems. Owing to its design, the price signal in the new financing system for social health insurance will be both weak and distorted and this will need to be corrected for competition to produce desired results. More freedom for contractual relations between insurers, healthcare providers and pharmaceutical companies could help to better reap the benefits of competition, but the government will need to watch the results closely and adjust framework conditions if needed. <P>Pérenniser le financement des dépenses de santé en Allemagne <BR>La réforme récente du secteur de la santé vise à assurer un financement plus viable des dépenses de santé en réduisant leurs effets négatifs sur l’emploi et en améliorant leur efficacité économique grâce à une concurrence accrue. Si l’augmentation prévue des contributions budgétaires se matérialise, elle permettra un certain découplage entre le financement du secteur de la santé et les revenus du travail. Une meilleure répartition des risques entre les assureurs pourrait réduire la tendance à une sélection des risques, si bien que la concurrence pourrait en fait conduire à une plus grande efficacité économique. Cela étant, la segmentation du système de santé dans un marché où cohabitent assurance privée et assurance publique continuera de poser des problèmes d’équité et d’efficacité. Par sa conception même, le nouveau système de financement de l’assurance maladie publique limite et fausse les signaux transmis par les prix ; il faudra donc remédier à ce problème pour permettre à la concurrence de produire les résultats souhaités. Une plus grande liberté des relations contractuelles entre assureurs, prestataires de soins et laboratoires pharmaceutiques permettrait sans doute de tirer un meilleur parti de la concurrence, mais les autorités devront faire preuve de vigilance et adapter les conditions cadres le cas échéant.
    Keywords: santé, public sector efficiency, gestion publique, health care, accès aux marchés
    JEL: H51 H73 I11
    Date: 2008–05–15
  10. By: Antonio Rodríguez (Departamento de Análisis Económico y Finanzas, Universidad de Castilla La Mancha, Albacete, España); Sunny Collings (Social Psychiatry & Population Mental Health Research Unit, Department of Public Health, University of Otago Wellington, New Zealand); Ping Qin (National Centre for Register-based Research, University of Aarhus, Denmark)
    Abstract: The objective of this paper was to investigate variations in the risk of suicide by socioeconomic status/position (SES) for men and women. Data on 15,648 suicide deaths between 18-65 year old men and women over the period 1981-1997 were linked to data on SES indicators, using a nested case control design. Cox’s proportional hazard regression models were fitted separately for men and women. The results showed that suicide, in both men and women aged 18 to 65 years, is strongly associated with a range of commonly measured indicators of SES, and that the association does vary by sex even after adjusting for these SES measures simultaneousely and controlling for the effect of health status. Low economic status, measured as low income, unskilled blue-collar work, unspecific wage work and unemployment, tends to increase suicide risk more prominently in men than in women; marital status seems to have a comparable influence on suicide risk in the both sexes and the risk is significantly higher among the singlers; parenthood is protective against suicide and the protective effect is statistically stronger for women; living in a big city tends to raise suicide risk for women but reduce the risk for men; Foreign citizens living in Denmark have a lower risk for suicide compared with Danish dwellers but the reduced risk is mainly confined to male immigrants. Our findings reflect the reality of the SES distribution of suicide risk, and underscore the importance and necessity of taking sex, various SES proxies and health factors into consideration mutually and simultaneously for a better understanding of this association.
    Keywords: Suicide risk; Socioeconomic status; Sex differences; Population study.
    JEL: I00
    Date: 2008–05
  11. By: Claire Finn (Research Fellow, School of Public Health and Population Science, University College Dublin); Niamh Hardiman (School of Politics and International Relations, University College Dublin)
    Date: 2007–11–12
  12. By: Liam Delaney (Geary Institute, School of Public Health & Population Science, School of Economics, University College Dublin); Colm Harmon (Geary Institute, School of Economics, University College Dublin); Cecily Kelleher (Geary Institute, School of Public Health & Population Science, University College Dublin); Caroline Kenny (Geary Institute, University College Dublin)
    Abstract: This paper examines the determinants of self-rated health in the Republic of Ireland using data from the 2001 Quarterly National Household Survey Health Module and the 2005 ESRI Time Usage Survey. Results indicate that self-rated health is a useful proxy for self-reported chronic illness indices. Higher education, having private medical insurance cover and being married is associated with better self-rated health. The strong inverse relationship between age and self-rated health is found to be robust to the inclusion of self-reported morbidity. Caregivers display lower self-rated health, even after controlling for age, marital status and education. We find only minor effects of gender. Understanding further the causal nature of the above associations is a key issue for future research.
    Date: 2007–12–10
  13. By: Kevin Denny (School of Economics & Geary Institute, University College Dublin)
    Abstract: In a 2005 paper Kanezawa proposed a generalisation of the classic Trivers- Willard hypothesis. It was argued that as a result taller and heavier parents should have more sons relative to daughters. Using two British cohort studies, evidence was presented which was partly consistent with the hypothesis. I analyse the relationship between an individual being male and their parents’ height and weight using one of the datasets. No evidence of any such relationship is found.
    Date: 2008–02–04

This nep-hea issue is ©2008 by Yong Yin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.