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Market failure in the diffusion of clinician-developed innovations: The case of off-label drug discoveries

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  • Eric von Hippel
  • Harold DeMonaco
  • Jeroen P. J. de Jong

Abstract

Medical doctors occasionally discover potentially valuable new off-label uses for drugs during their clinical practice. They apply these to help their own patients, but often have minimal incentives to invest in diffusing them further. Thus, the benefits that other clinicians might obtain are to some extent an externality from the perspective of the discoverer. This represents a form of market failure: effort invested in diffusion could lower adoption costs for many, but few innovators will invest that effort and social welfare will be accordingly reduced. In this study we explore for empirical evidence for the market failure just described, and do find evidence for it. In a sample of US clinicians, diffusion efforts increase the diffusion of generally valuable discoveries, but innovating clinicians typically invest little to support diffusion. We conclude with a discussion of how such a market failure could be addressed.

Suggested Citation

  • Eric von Hippel & Harold DeMonaco & Jeroen P. J. de Jong, 2017. "Market failure in the diffusion of clinician-developed innovations: The case of off-label drug discoveries," Science and Public Policy, Oxford University Press, vol. 44(1), pages 121-131.
    • Handle: RePEc:oup:scippl:v:44:y:2017:i:1:p:121-131.
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    File URL: http://hdl.handle.net/10.1093/scipol/scw042
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    References listed on IDEAS

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    1. Eric von Hippel & Jeroen P. J. de Jong & Stephen Flowers, 2012. "Comparing Business and Household Sector Innovation in Consumer Products: Findings from a Representative Study in the United Kingdom," Management Science, INFORMS, vol. 58(9), pages 1669-1681, September.
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    Cited by:

    1. Bradonjic, Philip & Franke, Nikolaus & Lüthje, Christian, 2019. "Decision-makers’ underestimation of user innovation," Research Policy, Elsevier, vol. 48(6), pages 1354-1361.
    2. Martie-Louise Verreynne & Rui Torres de Oliveira & John Steen & Marta Indulska & Jerad A. Ford, 2020. "What motivates ‘free’ revealing? Measuring outbound non-pecuniary openness, innovation types and expectations of future profit growth," Scientometrics, Springer;Akadémiai Kiadó, vol. 124(1), pages 271-301, July.
    3. de Jong, Jeroen P.J. & Gillert, Nils Lennart & Stock, Ruth M., 2018. "First adoption of consumer innovations: Exploring market failure and alleviating factors," Research Policy, Elsevier, vol. 47(2), pages 487-497.
    4. Wu, Chia-huei & de Jong, Jeroen P.J. & Raasch, Christina & Poldervaart, Sabrine, 2020. "Work process-related lead userness as an antecedent of innovative behavior and user innovation in organizations," Research Policy, Elsevier, vol. 49(6).
    5. von Hippel, Eric & Kaulartz, Sandro, 2021. "Next-generation consumer innovation search: Identifying early-stage need-solution pairs on the web," Research Policy, Elsevier, vol. 50(8).
    6. Globocnik, Dietfried & Faullant, Rita, 2021. "Do lead users cooperate with manufacturers in innovation? Investigating the missing link between lead userness and cooperation initiation with manufacturers," Technovation, Elsevier, vol. 100(C).
    7. de Jong, Jeroen P.J. & Rigtering, Coen & Spaans, Lara, 2023. "Heroes of diffusion: Making user innovations widely available," Research Policy, Elsevier, vol. 52(8).
    8. Mütterlein, Joschka & Kunz, Reinhard E. & Baier, Daniel, 2019. "Effects of lead-usership on the acceptance of media innovations: A mobile augmented reality case," Technological Forecasting and Social Change, Elsevier, vol. 145(C), pages 113-124.
    9. Hartmann, Mia Rosa & Hartmann, Rasmus Koss, 2023. "Hiding practices in employee-user innovation," Research Policy, Elsevier, vol. 52(4).
    10. Schweisfurth, Tim G. & Dharmawan, Magha P., 2019. "Does lead userness foster idea implementation and diffusion? A study of internal shopfloor users," Research Policy, Elsevier, vol. 48(1), pages 289-297.

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