Do Mergers Save Lives?


Speaker:Alice Bonaime, University of Arizona
Date: Tuesday 21 May 2019
Time: 13:45 - 15:15
Location: Xfi Henderson Lecture Theatre

Further details

Using novel data from the pharmaceutical industry, we study the impact of mergers on product prices and innovation. Mergers are associated with increases in drug prices without expansions in new drug output. Medications produced by acquiring rms increase in price approximately 5% more than medications sold by matched non-acquiring rms. Rival drug prices rise as well, consistent with a spillover e ect of mergers into the broader product market. Price increases are most pronounced for deals associated with greater market power consolidation and within drugs whose consumers are less price sensitive. Life-saving drugs are not exempt from prices hikes around mergers; if anything, their prices increase more.