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The Orphan Drug Act at 35: Observations and an Outlook for the Twenty-First Century Permalink

With Nicholas Bagley, Amitabh Chandra, Craig Garthwaite, and Ariel D. Stern
Published in Innovation Policy and the Economy, 2019

On the thirty‑fifth anniversary of the adoption of the Orphan Drug Act (ODA), we describe the enormous changes in the markets for therapies for rare diseases that have emerged over recent decades. The most prominent example is the fact that the profit‑maximizing price of new orphan drugs appears to be greater today than it was in 1983. All else equal, this should reduce the threshold for research and development (R&D) investment in an economically viable product. Further, the small size of patient populations for orphan drugs, together with the increasing prevalence of biologics among orphan drugs, have created a set of natural monopoly‑like markets in which firms face little competition, even after the end of formal periods of patent protection and market exclusivity. Additionally, the evolving technologies of drug development—in particular, the increasingly common use of auxiliary endpoints in clinical trials and the use of biomarkers for patient selection for treatment—now allow manufacturers to target smaller populations. Taken together, these changes raise doubts about whether the ODA encourages the development of products that otherwise would not have been brought to market or whether, instead, it simply rewards the producers of inframarginal products. After presenting empirical support for our claims of an evolving marketplace, we discuss the tradeoffs associated with reshaping the ODA for the twenty‑first century

Regulatory Approval and Expanded Market Size Permalink

With Amitabh Chandra and Craig Garthwaite

Regulatory review of new medicines is often viewed as a hindrance to innovation by increasing the hurdle to bring products to market. However, a more complete accounting of regulation must also account for its potential market expanding effects through quality certification. We combine data on FDA approvals for follow-on indications and patient-level data on utilization, and examine whether FDA approval of a follow-on indication increases the use of a drug for that indication. We find 5 facts for the market-expanding role of regulation: (1) follow-on approvals increase the share of patients taking a drug with that indication by 4.1 percentage points, or 40% increase over baseline use, at the time of approval; (2) there is little market learning prior to or following the approval of the follow-on indication, suggesting that such approvals fully certify the new use; (3) the effect of these approvals is larger for uses in a different disease area than previous indications, an increase equivalent to over 4 ½ years of market-learning; (4) it is FDA approval, not the initiation of clinical trials that generate the expansion in market size; (5) the market expansion is consistent with physicians prescribing the medicines more because of higher perceived benefits, not reduced administrative costs.

The Link between Health and Working Longer: Differences in Work Capacity Permalink

With Italo Lopez-Garcia, Nicole Maestas, and Kathleen Mullen
Published in Overtime: America's Aging Workforce and the Future of Working Longer, 2022

Good health is important for employment at older ages. However, little is known about how health-related functional abilities interact with occupational demands to shape work capacity. Using new data, we quantify individuals’ functional abilities, combine that information with occupation-specific ability requirements, and create new measures of individuals’ potential occupations and earnings. We find that average functional abilities, potential occupations, and potential earnings decline only slightly with age, indicating that many Americans maintain work capacity into their late 60s. Gaps in work capacity by race/ethnicity and gender are small, suggesting health is not a major driver of observed earnings disparities. However, gaps in work capacity by education are large and increase with age, suggesting diminished prospects for working longer among those with less education. Although work capacity among Black respondents improves across cohorts, today’s middle-aged white Americans have lower work capacity than those now at retirement age, suggesting rising rates of work disability as these cohorts age.

How Do Health Systems Capitalize on Public Programs? Side Effects of the 340B Drug Pricing Program (Job Market Paper) Permalink

Many government programs are designed to transfer resources to disadvantaged people and organizations that provide public services, but these programs often inadvertently create incentives for agents to exploit their provisions. Assessing how agents differentially game programs is essential to understand their incidence and correct market distortions. In this paper, I study how hospitals heterogeneously gamed the 340B Drug Pricing Program — a federal program intended to aid providers that treat low-income patients by requiring drug makers to sell drugs to participants at steep discounts. I focus on the role of health systems, which coordinate the business functions of numerous providers and may thereby facilitate passing 340B discounts on to drugs administered outside hospital walls. Using a staggered adoption design, I find that 340B increased hospitals' Medicare spending on cancer drugs by an average of $200,000 per year. Remarkably, this increase was entirely driven by health system-affiliated hospitals, which increased infusions by 72 percent. System hospitals increased medical oncologist employment only modestly, indicating that 340B did not lead hospitals to forge many new relationships with physicians through practice acquisitions. System hospitals also did not increase cancer screening or adopt new non-medical cancer treatments, indicating little effort to attract new patients. Instead, my analysis suggests that health systems necessarily have advantages in gaming programs like 340B, but resulting distortions may be substantially mitigated by regulation of billing practices.


Empirical Methods I

Graduate course, Harvard Kennedy School, Fall 2022

Overall Effectiveness 4.38/5

Ben always made himself available and was very knowledgeable. While other TAs in other courses would only assist during formal office hours, I could reach out to Ben … whenever and time would be made.

Empirical Methods II

Slides and R code

Graduate course, Harvard Kennedy School, Spring 2021 - 2023

Overall Effectiveness 4.61/5 (2021), 4.85/5 (2022), 4.63/5 (2023)
…[Y]ou’ve struck gold with Ben! I found the review section notes and slides exceptional — even if we couldnt get through all the content in the time with Ben, he made sure to focus on the things we were struggling with and still make good pace through the slides and then direct us to anything we didn’t have time for.