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Externalities from Medical Innovation: Evidence from Organ Transplantation

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  • Kevin Callison
  • Michael E. Darden
  • Keith F. Teltser

Abstract

We evaluate the introduction of direct-acting antiviral (DAA) therapy for Hepatitis C (HCV) on liver transplant allocation in the United States. We develop a model of listing and organ acceptance behavior for patients with both HCV-positive and HCV-negative end-stage liver disease. In the model, DAAs obviate the need for transplant for some HCV-positive patients, which shortens the waiting list, potentially benefiting HCV-negative registrants and inducing marginal HCV-negative patients to list. Using data from the universe of transplants between 2005 and 2019, we find that DAA availability resulted in an additional 5,682 liver transplants to HCV-negative recipients between 2014 and 2019, driven in part by a 37% average annual increase in HCV-negative waiting list registrations. Our estimates imply that DAAs generated $7.52 billion in positive externalities for HCV-negative patients during this period.

Suggested Citation

  • Kevin Callison & Michael E. Darden & Keith F. Teltser, 2023. "Externalities from Medical Innovation: Evidence from Organ Transplantation," NBER Working Papers 31673, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31673
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    More about this item

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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