Kent Oliver Bhupathi, MEcon, Director, Data Science & Engineering, SOLVE(D)
This year’s Allied Social Science Associations' 2024 Annual Meeting (ASSA 2024)—a global conference that showcases empirical evidence, theories and peer-reviewed research across policy and industry—was a delight. The annual meeting is primarily focused on a mix of professionals presenting their latest papers during topic-specific sessions, and their papers are then peer-critiqued in real time. I was able to attend several sessions that were specific to healthcare economics and pharma economics. The sessions were engaging, the receptions were lively, and the swag was next-level. (I made out like a nerdy bandit in Springer Publishing texts!)
In all, I managed to attend eight sessions across four disciplines, featuring twenty-eight unique paper presentations and twenty peer-reviewed discussions. Among the various sessions and topics, those that dug deep into the pharmaceutical industry were particularly fascinating. The prevailing theme was innovative capacity, and my favorites included four riveting investigations on pharmaceutical research and development—each offering a unique perspective on the challenges and strategies driving innovation in this vital sector:
Gosia Majewska: Incentivizing novelty in antibiotic development (job market paper)1
This research scrutinizes the efficacy of innovation incentives introduced in 2012 for antibiotic development. It assesses their impact on clinical trial success rates and market entry of new antibiotics. The findings suggest that these incentives favor projects using established technologies, but do not markedly influence the development of novel antibiotics. The research also underscores the importance of research subsidies in early clinical trial phases, which contributes to the understanding of policy interventions in stimulating pharmaceutical innovation, particularly within the context of antibiotic resistance.
Ekaterina Khmelnitskaya: Competition and attrition in drug development (dissertation)2
This research delves into the dynamics of drug development, focusing on the reasons behind the termination of drug development projects. Utilizing a dynamic model, it distinguishes between scientific and strategic reasons for project termination and examines the impact of government policies on drug innovation. The research finds that strategic considerations significantly influence the early termination of projects, and enhancing clinical success probabilities can boost new drug introductions, offering insights into the innovation processes within the pharmaceutical industry.
Jon A. Garfinkel et al: Competition and executive compensation3
This research investigates the impact of competitive shocks, specifically Breakthrough Therapy Designations, on executive compensation in the pharmaceutical industry. It reveals that firms respond to competitive pressures by increasing option-based compensation for executives, which correlates with increased efforts in new drug development. This finding supports theoretical models suggesting that competitive pressures drive innovation and that stock options encourage executives to pursue innovative projects.
Marius Guenzel and Tong Liu: Excess commitment in R&D4
This research explores the impact of unexpected delays in R&D projects on the commitment of pharmaceutical companies to these projects. It shows that delays often lead to increased commitment to ongoing projects, affecting the initiation of new projects and having mixed effects on consumer welfare, particularly in the development of orphan drugs.
These papers collectively underscore the multifaceted nature of challenges and strategies in pharmaceutical R&D and highlight the importance of nuanced policy frameworks, strategic agility, incentivization of leadership and rational project management. Such discussions at ASSA 2024 were not just about the state of pharmaceuticals today; they were a forward-looking analysis of what it takes to sustain innovation in an industry that stands at the forefront of human health and well-being. Beyond this, each paper was filled with a wealth of insight for which I could not truly do justice in this article—so, I do hope that more people are able to find time to read them for themselves.
ASSA 2024 was a powerful reminder of the value of intellectual exchange and debate in shaping the future of industries. The insights gained here are not just academic; they are the guiding lights for policymakers, industry leaders and researchers dedicated to advancing the frontiers of applied and frontier science.