Who Benefits from New Medical Technologies? Estimates of Consumer and Producer Surpluses for HIV/AIDS Drugs

Tomas J. Philipson, Anupam B. Jena

NBER Working Paper No. 11810
Issued in December 2005
NBER Program(s):Health Care, Productivity, Innovation, and Entrepreneurship

The social value of an innovation is comprised of the value to consumers and the value to innovators. We estimate that for the HIV/AIDS therapies that entered the market from the late 1980's onwards, innovators appropriated only 5% of the social surplus arising from these new technologies. Despite the high annual costs of these drugs to patients, the low share of social surplus going to innovators raises concerns about advocating cost-effectiveness criteria that would further reduce this share, and hence further reduce incentives for innovation.

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Document Object Identifier (DOI): 10.3386/w11810

Published: Tomas Philipson & Anupam Jena, 2006. "Who Benefits from New Medical Technologies? Estimates of Consumer and Producer Surpluses for HIV/AIDS Drugs," Forum for Health Economics & Policy, Berkeley Electronic Press, vol. 0(1), pages 1005-1005. citation courtesy of