Research

Working papers

Common Ownership and Market Entry: Evidence from the Pharmaceutical Industry
with A. Banal-Estanol and J. Seldeslachts Online Media coverage: Bloomberg Businessweek,
Accepted, AEJ: Micro

Common ownership - where several firms are (partially) owned by the same investors - and its impact on product market competition has recently drawn much attention. This paper focuses on its implications for market entry. Specifically, we consider the entry decisions of generic pharmaceutical firms into drug markets that are opened up by the end of regulatory protection and which were previously dominated by a single firm selling the brand name drug. We find evidence that common ownership affects entry in US pharmaceutical markets. In particular, we find that an increase in common ownership leads to a reduction in entry, both at the individual and market level. This key finding is robust to different measures of common ownership, different sets of potential entrants, different estimation methods and specifications, different market definitions, and different outcome variables.

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The Cost of Influence: How Gifts to Physicians Shape Prescriptions and Drug Costs*
with M. Valente Online Media coverage:  Business Scholarship Podcast  
Winner of the NOeG Young Economists' Award 2023
Accepted, Journal of Health Economics

This paper studies how gifts - monetary or in-kind payments - from drug firms to physicians in the US affect prescriptions and drug costs. We estimate heterogeneous treatment effects by combining physician-level data on antidiabetic prescriptions and payments with causal inference and machine learning methods. We find that payments cause physicians to prescribe more brand drugs, resulting in a cost increase of $30 per dollar received. Responses differ widely across physicians, and are primarily explained by variation in patients’ out-of-pocket costs. A gift ban is estimated to decrease drug costs by 3-4%. Taken together, these novel findings reveal how payments shape prescription choices and drive up costs.

*This paper was previously titled "Who Pays for Gifts to Physicians? Heterogeneous Effects of Industry Payments on Drug Costs" 

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Do Expert Panelists Herd? Evidence from FDA Committees
with R. Midjord  Online 

We develop a structural model to address the question whether, and to what extent, expert panelists engage in herd behavior when voting on important policy questions. Our data comes from FDA advisory committees voting on questions concerning the approval of new drug applications. We utilize a change in the voting procedure from sequential to simultaneous voting to identify herding. Estimates suggest that around half of the panelists are willing to vote against their private assessment if votes from previous experts indicate otherwise and, on average, 9 percent of the sequential votes are actual herd-votes. Temporary committee members are more prone to herding than regular (standing) members. We find that simultaneous voting improves information aggregation given our estimates.

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Acquiring R&D Projects: Who, When, and What? Evidence from Antidiabetic Drug Development
with J. Malek, J. Seldeslachts and R. Veugelers Online

This paper analyzes M&A patterns in the antidiabetics industry along the innovation process. For this purpose, we  construct a database with all corporate R&D activities for individual antidiabetics projects over the period 1997 - 2017, and add highly detailed information on firms' technology dimension and their position in product markets. This allows us to identify the identity of targets and acquirers (who), the timing of acquisitions along the R&D process (when), and which type of R&D projects changes hands in terms of novelty (what). 

Publications 

Adverse Effects of Acquisitions in the Pharmaceutical Industry
with K. N. Vokinger Online  Nature Medicine 2022 

Publicly funded research leads to the development of many new drugs, but the profits are largely reaped by big pharmaceutical companies through exclusive licensing deals, mergers and acquisitions, which can reduce competition and patients’ access to medicines. Using chimeric antigen receptor-Tcell therapy (CAR-T) for the treatment of certain hematological malignancies as a case study, this article highlights the challenges of these acquisitions. 

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Common Ownership in the US Pharmaceutical Industry: A Network Analysis
with A. Banal-Estanol and J. Seldeslachts Online  in The Antitrust Bulletin 66, 1, Spring 2021.
Media coverage: TRT World 

We investigate patterns in common ownership networks between firms that are active in the US pharmaceutical industry for the period 2004-2014. Our main findings are that “brand firms”—ie firms that have R&D capabilities and launch new drugs—exhibit relatively dense common ownership networks with each other that further increase significantly in density over time, whereas the network of “generic firms”—ie firms that primarily specialize in developing and launching generic drugs—is much sparser and stays that way over the span of our sample. Finally, when considering the common ownership links between brands firms, on the one hand, and generic firms, on the other, we find that brand firms have become more connected to generic firms over time. We discuss the potential antitrust implications of these findings. 

Policy 

Es braucht innovative Regulierungen (in German), CSS Im Dialog, February 2024. Online  

Evaluation of Climate Policy Based on Machine Learning: The Case of Switzerland, Policy report for the Swiss Federal Office for the Environment, 2023, with V. Cruz and L. Bretschger

The Antitrust Case Against Apple
with B. Kotapati, S. Mutungi, J. Schroeder, S. Shao and M. Wang  Online 
Media coverage: The Information, Politico, No. 4 on the world’s most downloaded antitrust articles of 2020 

'Killer acquisitions' en innovatie (in Dutch) with J. Malek and J. Seldeslachts, KVS Preadviezen 2020,  Online

US and EU secure vaccine production on home soil with J. Malek, J. Seldeslachts and M. Wieting, DIW Focus No. 6, 10/2020,  Online

Changes in Common Ownership of German Companies with J. Seldeslachts and A. Banal-Estanol, DIW Economic Bulletin 30/2017, Online, Media coverage: Mail & Guardian 

Work in progress

Greening the Deal: Do acquisitions boost or block environmental transformation? with D. Jaggi and J. Posth

The Impact of Mergers on Green Innovation  in  the US  Power Sector with V. da Cruz

Strategic Voting in Advisory Committees with  R. Midjord and A. Guarino