Innovation, Incentives, and Inefficiencies in Pharmaceutical Markets

Session Submission Type: Panel

Abstract

This panel brings together three studies that examine the intersection of pharmaceutical innovation, economic incentives, and clinical effectiveness across diverse therapeutic areas. Collectively, these papers highlight how drug development, evaluation, and utilization are shaped not only by clinical evidence, but also by financial and institutional structures.

Mireille Jacobson and colleagues examine the introduction of immune checkpoint inhibitors (ICIs) for metastatic melanoma, one of the most consequential innovations in oncology care. Using Medicare claims data and colorectal cancer as a control, they find that ICIs significantly improved 1-year survival and reduced reliance on traditional treatments like chemotherapy and radiation. However, total health care spending increased due to the high cost of ICIs, with survival benefits materializing only after broader diffusion.

Matthew Chenoweth explores the influence of industry sponsorship on reported outcomes in cancer drug evaluations. Using a novel dataset of randomized clinical trials and cost-effectiveness analyses, he demonstrates that industry-funded studies systematically overstate the effectiveness and economic value of cancer therapies. His findings reveal strong evidence of sponsorship and publication bias, largely driven by study design choices that favor the sponsoring drug’s profile.

Srikanth Kadiyala and colleagues focus on off-label prescribing practices, analyzing data from the 2019 Medical Expenditure Panel Survey to study trazodone—an antidepressant frequently used for non-approved indications (insomnia and anxiety) of uncertain health value. They find that approximately 24 million prescriptions were filled for trazodone at a total cost of $294 million; estimate that at a minimum, 85% of utilization (~20 million prescriptions) and 84% of total health care spending ($247 million) was for off-label indications, primarily insomnia. Their findings suggest a need for policy solutions aimed at supporting a more efficient system of off-label utilization.

Together, these papers underscore the importance of aligning drug development, evaluation, and use with clinical value. They emphasize the gains from innovation, the need for independent assessment mechanisms, and policy solutions that reduce inefficiencies and support high-value care.

 

Policy Area

• Health Policy

Chair

• Christine Buttorff, RAND Corporation

Discussant

• Risha Gidwani, University of Colorado Denver

Individual Presentations

• Productivity of Medical Innovation: Real-world evidence on the Impact of Immune Checkpoint Inhibitors - Non-Presenting Co-Author: Danea M Horn; Presenting Author: Mireille Jacobson, University of Southern California; Non-Presenting Co-Author: Abby Alpert

• Off-Label Policy Through the Lens of Trazodone Usage and Spending in the United States - Presenting Author: Srikanth Kadiyala, University of California - Los Angeles; Non-Presenting Co-Author: Matthew Chenoweth, University of California - Los Angeles

• The Impact of Mandatory Universal Pharmaceutical Insurance On Prescription Opioid Use: Evidence from Canada - Presenting Author: Karen Ugarte Bravo, University of Toronto

Organizer

• Srikanth Kadiyala, University of California - Los Angeles