"The Impact of Self or Social-regarding Messages: Experimental Evidence from Antibiotics Purchases in China" (with Daixin He and Fangwen Lu)
Journal of Development Economics, June 2023
We study two interventions in Beijing, China, that provide patients with information on antibiotic resistance via text message to discourage the overuse of antibiotics. The messages were sent once a month for five months. One intervention emphasizes the threat to the recipient’s own health and is found to have negligible effects. The other intervention, which highlights the overall threat to society, reduces antibiotics purchases by 17% in dosage without discouraging healthcare visits and other medicine purchases. The results demonstrate that prosocial messaging can have the potential to address public health issues that require collective action.
"Drug Affordability, Utilization and Adherence: Evidence from a Prescription Drug Price Reduction in China" (with Daixin He)
Improving drug affordability are challenges faced by governments globally. In developing countries, the existence of non-price barriers to healthcare utilization makes the effect of improving affordability ambiguous. This paper evaluates the effect of price reduction on drug utilization and adherence by studying a drug procurement program in China, which brought down the prices of 10 chronic condition drugs by an average of 78%. Using a difference-in-differences design with a set of comparable drugs as controls, we find that this improvement in affordability led to a significant increase in demand by uninsured patients, whose purchases of treated drugs increased by 28.4% more than the insured. This response came both from new and existing medication takers. Drug adherence was improved for the uninsured who had poorer adherence at baseline. Our findings suggest that the bargaining power of the government to negotiate down drug prices can significantly improve utilization and adherence for the uninsured in the case of chronic conditions, which increasingly account for a large share of the disease burden in developing countries.
"Improving Regulation for Innovation: Evidence from China’s Pharmaceutical Industry" (with Ruixue Jia, Xiao Ma and Yiran Zhang)
CERP Working Paper 18698; NBER Working Paper 31976
This study investigates how enhanced regulation can promote innovation, focusing on the impacts of a significant regulatory reform in China's pharmaceutical sector implemented in 2015. Inspired by regulatory practices in the U.S., the reform aimed to address application backlogs and reduce administrative waiting time for new drug development. Using data at the drug and firm levels during 2012--2021, we make three main findings: (1) drug categories experiencing improved approval times witnessed a surge in investigational new drug applications and related clinical trials; (2) despite little improvement in innovativeness (measured by novel targets unexplored by U.S. counterparts) within drug categories, the reform led to changes in firm composition, attracting innovative new firms and boosting overall drug innovativeness; and (3) the market recognized the improvement in drug innovation, as reflected in stock price adjustments post new drug registrations after the reform. Our findings demonstrate that regulatory barriers can hinder the entry of innovative firms and suggest that latecomers could boost their innovation potential by adopting specific, effective regulatory practices from frontier countries.
"Tradeoff Between Price Reduction and Choice Distortion in Drug Procurement" (with Ran Li)
The rapid rise in pharmaceutical expenditures presents a global policy challenge. While policies that achieve price reductions are widely believed to enhance affordability and patient welfare, these interventions may yield unexpected outcomes. China's 2019 centralized drug procurement reform successfully lowered prices through competitive bidding but limited brand choice as domestic generic producers won most bids. Analyzing 1.4 million patient records from Beijing healthcare centers through a difference-in-differences framework, we found that patients with brand preferences (60.34% of pre-policy purchasers) significantly reduced healthcare engagement post-policy, contrasting with increased engagement among those without brand preferences. This highlights the dual effects of generic entry: improved affordability alongside potential utilization suppression due to preference mismatches, suggesting that pharmaceutical policies should balance cost containment with patient-centered care considerations.