Pierre Azoulay

Consumption Externalities and Diffusion in Pharmaceutical Markets: Antiulcer Drugs

We examine the role of consumption externalities in the demand for pharmaceuticals at both the brand level and over a therapeutic class of drugs. These effects emerge when use of a drug by others affects its value, and/or conveys information abut efficacy and safety to patients and physicians. This can affect that rate of market diffusion for a new entrant, and can lead to herb behavior whereby a particular drug can dominate the market despite the availability of close substitutes. We use data for H2-antagonist antiulcer drugs to estimate a dynamic demand model and quantify these effects. The model has three components: an hedonic price equation that measures how the aggregate usage of a drug, as well as conventional attributes, affect brand valuation; equations relating equilibrium market shares to quality-adjusted prices and marketing levels; and diffusion equations describing the dynamic adjustment process. We find that consumption externalities influence both valuations and rates of diffusion, but that they operate at the brand and not the therapeutic class level.

Nasty, Brutish, and Short: Embeddedness Failure in the Pharmaceutical Industry

Since the early 1990s, U.S. pharmaceutical firms have partially outsourced the coordination of the clinical trials they sponsor to specialized firms called contract research organizations. Although these exchanges appeared ripe for the development of close, “embedded” ties, they were in fact “nasty, brutish, and short” — i.e., marked by ill-will and a bias toward replacing current exchange partners due to perceptions of underperformance. Drawing on in-depth field work, we use causal loop diagrams to capture this puzzle and to help explain it. Our analysis suggests that attempts to build embedded relations will fail if the parties do not recognize the limitations of the commitments they can credibly make. More generally, when managers misdiagnose as failure what is in fact a trade-off inherent in the design of their organizations, they risk engendering even worse outcomes than those they would otherwise attain.

Research efficiency: Turn the scientific method on ourselves

How can we know whether funding models for research work? By relentlessly testing them using randomized controlled trials, says Pierre Azoulay.

The applied value of public investments in biomedical research

For biomedical patents, basic research is just as valuable as applied research. Patents from papers both basic and applied Public funding for research depends on the idea that the resulting knowledge translates into socially valuable outcomes, such as medicines. Such linkages are easier to assert than to prove. Li et al. studied 27 years of grant-level funding by the U.S. National Institutes of Health. About 10% of grants are directly cited by patents, suggesting some technological application, and 30% of grants are cited in research articles that are then cited in patents. Five percent of grants result in papers cited by patents for successfully approved drugs, compared with less than 1% that are cited directly by such patents. These patterns hold regardless of whether the research is more basic or applied. Science, this issue p. 78 Scientists and policy-makers have long argued that public investments in science have practical applications. Using data on patents linked to U.S. National Institutes of Health (NIH) grants over a 27-year period, we provide a large-scale accounting of linkages between public research investments and subsequent patenting. We find that about 10% of NIH grants generate a patent directly but 30% generate articles that are subsequently cited by patents. Although policy-makers often focus on direct patenting by academic scientists, the bulk of the effect of NIH research on patenting appears to be indirect. We also find no systematic relationship between the “basic” versus “applied” research focus of a grant and its propensity to be cited by a patent.

The mobility of elite life scientists: Professional and personal determinants

As scientists’ careers unfold, mobility can allow researchers to find environments where they are more productive and more effectively contribute to the generation of new knowledge. In this paper, we examine the determinants of mobility of elite academics within the life sciences, including individual productivity measures and for the first time, measures of the peer environment and family factors. Using a unique data set compiled from the career histories of 10,051 elite life scientists in the U.S., we paint a nuanced picture of mobility. Prolific scientists are more likely to move, but this impulse is constrained by recent NIH funding. The quality of peer environments both near and far is an additional factor that influences mobility decisions. We also identify a significant role for family structure. Scientists appear to be unwilling to move when their children are between the ages of 14–17, and this appears to be more pronounced for mothers than fathers. These results suggest that elite scientists find it costly to disrupt the social networks of their children during adolescence and take these costs into account when making career decisions.

Status Spillovers: The Effect of Status-conferring Prizes on the Allocation of Attention

We investigate the effect of a status-enhancing prize on the attention that a recipient’s “neighbors” subsequently receive. Do neighbors—individuals who work in economic, intellectual, or artistic domains that are proximate to prize winners—bask in the reflected glory of the ascendant actor and therefore gain as well? Or does competition for attention ensue, attenuating the recognition neighbors would otherwise have garnered? We study the spillover effects of status shocks using life sciences research articles published from 1984 through 2003. Exploiting expert-assigned article keywords, we identify papers that are topically related to publications of future appointees to the prestigious Howard Hughes Medical Institute (HHMI). In difference-in-difference specifications, we find that these scientific neighbor articles experience substantial declines in citation rates after HHMI appointments are announced. That is, neighboring articles attract less attention when authors of papers near them receive a prestigious prize. This pattern reflects more than the trivial transfer of attention from non-winners to winners: once prizes are announced, actors cede scientific territory to prize winners and pursue other opportunities. These negative spillover effects are moderated or even reversed by scientists’ social connections and by the novelty and stature of scientific domains.

National Institutes of Health Peer Review: Challenges and Avenues for Reform

The National Institute of Health (NIH), through its extramural grant program, is the primary public funder of health-related research in the United States. Peer review at NIH is organized around the twin principles of investigator initiation and rigorous peer review, and this combination has long been a model that science funding agencies throughout the world seek to emulate. However, lean budgets and the rapidly changing ecosystem within which scientific inquiry takes place have led many to ask whether the peer-review practices inherited from the immediate postwar era are still well suited to 21st-century realities. In this essay, we examine two salient issues: (1) the aging of the scientist population supported by NIH and (2) the innovativeness of the research supported by the institutes. We identify potential avenues for reform as well as a means for implementing and evaluating them.

Age and High-Growth Entrepreneurship

Many observers, and many investors, believe that young people are especially likely to produce the most successful new firms. We use administrative data at the U.S. Census Bureau to study the ages of founders of growth-oriented start-ups in the past decade. Our primary finding is that successful entrepreneurs are middle-aged, not young. The mean founder age for the 1 in 1,000 fastest growing new ventures is 45.0. The findings are broadly similar when considering high-technology sectors, entrepreneurial hubs, and successful firm exits. Prior experience in the specific industry predicts much greater rates of entrepreneurial success. These findings strongly reject common hypotheses that emphasize youth as a key trait of successful entrepreneurs.