Can medical progress be sustained?

Anup Malani

"The NBER Bulletin on Aging and Health provides summaries of publications like this. You can sign up to receive the NBER Bulletin on Aging and Health by email. Improvements in health have been a major contributor to gains in overall economic welfare. In this paper, we argue that previous economic research on R&D has overlooked an important difference between medical R&D and R&D in other sectors. The health care sector exhibits a unique linkage between product development and output markets. Participants in clinical trials for new medical products are also potential consumers of existing approved medical products. This overlap between input supply and output demand has non-standard effects on innovative returns over time and across geography. First, medical R&D has a self-limiting effect. Contemporary innovation discourages trial participation and slows down development...