I write about health care innovation, production, and prices. I am interested in how to encourage product makers to develop products that would otherwise be neglected. I was the lead author of two articles that became law. In a 2006 article, we proposed the Food and Drug Administration’s priority review voucher program which became law in 2007. In a 2015 article, we proposed the Environmental Protection Agency’s vector expedited review voucher program which became law in 2022.
I am not only interested in why companies make new products, but also in the quality of those products and why they sometimes stop making products: I write about drug and vaccine shortages. One factor that can precede a shortage is low prices. I write about drug prices, including launch prices and patient prices (copayments). Early in my career, I was interested in where businesses locate.
Priority review vouchers
I was lead author of a 2006 article which became law in 2007. We proposed a priority review voucher program to encourage innovation for neglected diseases(Ridley et al. 2006). We worked with members of the Senate for passage of the voucher law in 2007. The FDA has awarded more than 50 vouchers and vouchers sell for about $100 million each, so we created a multi-billion dollar market and encouraged new drugs that save lives. You can read more at this voucher page.
- David B. Ridley, Pranav Ganapathy, and Hannah E. Kettler. 2021. “US Tropical Disease Priority Review Vouchers: Lessons in Promoting Drug Development and Access.” Health Affairs, 40(8): 1243-1251.
- David B. Ridley and Stephane A. Régnier. 2016. “The Commercial Market for Priority Review Vouchers.” Health Affairs, 35(5): 776-783.
- David B. Ridley, Jennifer Dent, and Christopher Egerton-Warburton. 2016. “Efficacy of the Priority Review Voucher Program.” Journal of the American Medical Association, 315(15): 1659-1660.
- David B. Ridley. 2015. “The Regulatory Burden of the Priority Review Voucher Program.” Health Affairs Forefront.
- Joshua S. Gans and David B. Ridley. 2013. “Innovation Incentives under Transferable Fast-Track Regulatory Review.” Journal of Industrial Economics. Vol. 61, No. 3: 789-816. (Preprint)
- David B. Ridley and Alfonso Calles Sánchez. 2010. “Introduction of European Priority Review Vouchers to Encourage Development of New Medicines for Neglected Diseases.” The Lancet. 376 (9744): 922-927. (Preprint)
- Jeffrey L. Moe, Henry G. Grabowski, and David B. Ridley. 2009. “FDA Review Vouchers.” The New England Journal of Medicine. 360 (8): 837-838.
- David B. Ridley, Henry G. Grabowski, and Jeffrey L. Moe. 2006. “Developing Drugs for Developing Countries.” Health Affairs. 25 (2): 313-324. Appendix (Preprint)
Vector expedited review vouchers
Following the success of the priority review voucher, we proposed vector expedited review vouchers in a 2017 article. Our proposal became law in 2022. Under the program, the maker of a pesticide to treat bed nets receives a voucher for faster regulatory review at the US Environmental Protection Agency for a different product.
- Jeffrey Moe, Alan Ayers, Nick Hamon, Derric Nimmo, and David B. Ridley. 2023. “How to Make the Most of a New Voucher Program, Encourage Pesticide Development, and Prevent Disease.” Health Affairs Forefront.
- David B. Ridley, Jeffrey L. Moe, and Nick Hamon. 2017. “A Voucher System to Speed Review Could Promote a New Generation of Insecticides to Fight Vector-Borne Diseases.” Health Affairs, 36(8): 1461-1468.
Innovation
To encourage drug development for neglected diseases, government agencies can provide direct funding of clinical trials. However, some government agencies will free ride, diverting funds to other diseases and purposes. Another way to encourage drug development for neglected diseases is to offer transferable exclusivity vouchers.
- Margaret K. Kyle, David B. Ridley, and Su Zhang. 2017. “Strategic Interaction among Governments in the Provision of a Global Public Good,” Journal of Public Economics, 156: 185–199. Summary
- Beth Boyer, Adam Kroetsch, Andrea Thoumi, and David B. Ridley. 2022. “How to Motivate Drug Development for Infectious Diseases.” Health Affairs Forefront.
- Beth Boyer, Adam Kroetsch, and David B. Ridley. 2022. “Design of a Transferable Exclusivity Voucher Program.” Duke Margolis Center for Health Policy White Paper.
- Towse, Adrian, Eric Keuffel, Hannah E. Kettler, and David B. Ridley. 2012. “Drugs and Vaccines for Developing Countries.” The Oxford Handbook of the Economics of the Biopharmaceutical Industry, 302-335. (Preprint)
Safety monitoring
We often take for granted that the medicines we use are safe. I am working on a new project about drug quality and FDA oversight. I have also written about manufacturer efforts to monitor drug safety.
- David B. Ridley, Judith M. Kramer, Hugh H. Tilson, Henry G. Grabowski, and Kevin A. Schulman. “Spending on Postapproval Drug Safety.” 2006. Health Affairs, 25(2): 420-428.
Shortages
In health care, shortages are surprisingly common. One cause of drug and vaccine shortages is low and inflexible prices. Manufacturers invest little in spare capacity if margins are thin. Rationing has been effective at mitigating the harm from a vaccine shortage, provided that some supply is available from a second manufacturer.
- Eli Liebman, Emily Lawler, Abe Dunn, and David B. Ridley (randomized author order). “Consequences of a Shortage and Rationing: Evidence from a Pediatric Vaccine.” Revising for resubmission
- Ali Yurukoglu, Eli Liebman, and David B. Ridley. 2017. “The Role of Government Reimbursement in Drug Shortages.” American Economic Journal: Economic Policy, 9(2): 348–382. (Preprint)
- David B. Ridley, Xiaoshu Bei, and Eli Liebman. 2016. “No Shot: US Vaccine Prices and Shortages.” Health Affairs, 35(2): 235-241. (Preprint) (Summary in The New York Times)
Prices
Government policy influences both drug launch prices and price changes.
- David B. Ridley and Chung-Ying Lee. 2020 “Does Medicare Reimbursement Drive up Drug Launch Prices?” The Review Economics and Statistics. 102(5): 980-993. (Video)
- David B. Ridley and Su Zhang. 2017. “Regulation of Price Increases.” International Journal of Industrial Organization, 50: 186–213. (Preprint)
- Stephane A. Régnier and David B. Ridley. 2015. “Forecasting Market Share in the US Pharmaceutical Market.” Nature Reviews Drug Discovery. 14 (9): 594-595. Supplement. (Preprint)
- David B. Ridley. 2015. “Payments, Promotion, and the Purple Pill.” Health Economics. 24 (1): 86-103. (Preprint)
- Peter Arcidiacono, Paul Ellickson, Peter Landry, and David B. Ridley. 2013. “Pharmaceutical Followers.” International Journal of Industrial Organization. 31 (5): 538–553 (NBER Preprint)
Paul Geroski Award for one of the two best papers in the journal that year. - Margaret K. Kyle and David B. Ridley. 2007. “Would Greater Transparency and Uniformity of Health Care Prices Benefit Poor Patients?” Health Affairs. 26 (5): 1384-1391. (Preprint)
- Henry G. Grabowski, David B. Ridley, and Kevin A. Schulman. 2007. “Entry and Competition in Generic Biologics.” Managerial and Decision Economics. 28: 439-451. (Preprint)
- David B. Ridley and Kirsten Axelsen. 2006. “Impact of Medicaid Preferred Drug Lists on Therapeutic Adherence.” Pharmacoeconomics. 24, Suppl. 3: 65-78.
Location
When businesses cluster, they engage in more intense price competition. So why cluster? Followers cluster near leaders to i) free ride on the demand information of the market leader, ii) because they can differentiate their products and mitigate price competition, and iii) because zoning forces clustering.
- David B. Ridley. 2013. “Hotelling’s Law.” In D. Teece and M. Augier, eds. The Palgrave Encyclopedia of Strategic Management. (Preprint)
- David B. Ridley, Frank A. Sloan, and Yan Song. “Retail Zoning and Competition.”
- Gabriel A. Picone, David B. Ridley, and Paul A. Zandbergen. 2009. “Distance Decreases with Differentiation: Strategic Agglomeration by Retailers.” International Journal of Industrial Organization. 27 (3): 463-473. (Preprint)
- David B. Ridley. 2008. “Herding versus Hotelling: Market Entry with Costly Information.” Journal of Economics and Management Strategy. 17 (3): 607-631. (Preprint)
For more information, see my Google Scholar page.