Drug innovations can outpace regulatory drug approval processes designed to control risk, creating heterogeneous risks among approved drugs. This paper estimates a price model for risky narrow therapeutic index (NTI) drugs. The traditional generic approval process has been criticized as insufficient to guarantee therapeutic equivalence in NTI drugs, leading to higher risks of toxicity or ineffectiveness when a patient switches from a brand-name version of an NTI to a generic version, or between generic versions. Using data from the Medical Expenditure Panel Survey, this paper finds evidence of a significant price penalty for NTI drugs. The paper also finds a smaller gap between brand-name and generic prices for NTI drugs than for non-NTI drugs, consistent with costly switching. An analysis of drug consumption bundles also supports this theory. These results show that despite the many information asymmetries and agency issues in the pharmaceutical market, there is evidence of sensitivity to risk in price and consumption behavior.

中文翻译：

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NTI药物的风险惩罚的经验证据

药物创新可以超越旨在控制风险的监管药物批准流程，从而在批准的药物之间产生异类风险。本文估计了风险窄治疗指数（NTI）药物的价格模型。人们批评传统的仿制批准程序不足以保证NTI药物具有治疗等效性，当患者从NTI的商标版本转换为仿制药或在仿制药之间转换时，会导致更高的毒性或无效风险。利用来自医疗支出小组调查的数据，本文发现了NTI药物的巨大价格损失的证据。该论文还发现，与非NTI药品相比，NTI药品的品牌价格和通用价格之间的差距更小，这与昂贵的转换费用保持一致。对毒品消费捆绑的分析也支持这一理论。