Is American Health Care Uniquely Inefficient? Evidence from Prescription Drugs

Margaret Kyle; Heidi Williams

doi:10.1257/aer.p20171086

Is American Health Care Uniquely Inefficient? Evidence from Prescription Drugs

¹ MINES ParisTech, PSL Research University, CERNA-Centre d'economie industrielle, i3UMR CNRS, 60BD St. Michel, 75006 Paris, France, and CEPR (e-mail: ) · ² Department of Economics, MIT, 50 Memorial Drive, E52-440, Cambridge, MA 02142 (e-mail: )

American Economic Review 2017 open access

Alan Garber and Jonathan Skinner (2008) famously conjectured that the US health care system was “uniquely inefficient” relative to other countries. We test this idea using cross-country data on prescription drug sales newly linked with an arguably objective measure of relative therapeutic benefits, or drug quality. Specifically, we investigate how higher and lower quality drugs diffuse in the US relative to Australia, Canada, Switzerland, and the UK. Our tabulations suggest that lower quality drugs diffuse more in the US relative to high quality drugs compared to each of our four comparison countries--consistent with Garber and Skinner's conjecture.

DOI: 10.1257/aer.p20171086
Volume: 107 (5)
Pages: 486-490
Language: en
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