We examine trends in the productivity of the pharmaceutical sector over the past three decades. Motivated by Ricardo’s insight regarding demand-driven productivity in settings of scarce resources, we examine the industry’s aggregate R&D production function. Using exogenous demand shocks to instrument investments, we find that demand growth can explain a large portion of R&D growth, and the industry’s returns to scale have been stable whereas total factor productivity has declined significantly. Predictions based on these results are in line with Ricardo’s conclusion that productivity and rents are endogenous to demand.
Kyle R. Myers
Assistant Professor of Business Administration
Assistant Professor of Business Administration
Kyle Myers is an assistant professor of business administration in the Technology and Operations Management unit. He teaches the first-year Technology and Operations Management course.
Professor Myers studies the economics of innovation. His research lies at the intersections of science, health care, and the commercialization process. More specifically, Professor Myers is interested in the strategic choices and performance of scientists, the supply and demand of innovation in high-tech sectors, public versus private funding of R&D, and the management of innovation in large organizations such as hospitals and pharmaceutical and engineering firms. His work has received funding from the Kauffman Foundation and was awarded the NBER-IFS Predoctoral Scholarship in the Value of Medical Research.
Professor Myers holds a Ph.D. from the Wharton School’s Department of Health Care Management and Economics. He has a M.S. in Health Policy and Management and a B.S. in Biology from Penn State University. Prior to joining HBS, he served as a post-doctoral fellow at the National Bureau of Economic Research and worked at the Centers for Disease Control and Prevention.
- Featured Work
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This paper estimates the degree to which scientists are willing to change the direction of their work in exchange for resources. Novel data from the National Institutes of Health is used to estimate an entry model that accounts for strategic interactions. Inducing a scientist to change their direction by 1 standard deviation, a qualitatively small difference, requires a four-fold increase in funds, an extra $1 million per year. But at current levels, the costs and benefits of directed versus undirected research appear to be quite similar.In markets where consumers seek expert advice regarding purchases, firms seek to influence experts, raising concerns about biased advice. Assessing firm-expert interactions requires identifying their causal impact on demand, amidst frictions like market power. We study pharmaceutical firms’ payments to physicians, leveraging instrumental variables based on regional spillovers from hospitals’ conflict-of-interest policies and market shocks due to patent expiration. We find that the average payment increases prescribing of the focal drug by 73 percent. Our structural model estimates indicate that payments decrease total surplus, unless payments are sufficiently correlated with information (vs. persuasion) or clinical gains not captured in demand.
- Journal Articles
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- Myers, Kyle, and Lauren Lanahan. "Estimating Spillovers from Publicly Funded R&D: Evidence from the US Department of Energy." American Economic Review 112, no. 7 (July 2022): 2393–2423. View Details
- Krieger, Joshua L., Kyle R. Myers, and Ariel D. Stern. "How Important Is Editorial Gatekeeping? Evidence from Top Biomedical Journals." Review of Economics and Statistics (forthcoming). View Details
- Gao, Jian, Yian Yin, Kyle R. Myers, Karim R. Lakhani, and Dashun Wang. "Potentially Long-Lasting Effects of the Pandemic on Scientists." Art. 6188. Nature Communications 12 (2021). View Details
- Myers, Kyle, Wei Yang Tham, Yian Yin, Nina Cohodes, Marie Thursby, Jerry Thursby, Peter Schiffer, Joseph Walsh, Karim R. Lakhani, and Dashun Wang. "Unequal Effects of the COVID-19 Pandemic on Scientists." Nature Human Behaviour 4, no. 9 (September 2020): 880–883. View Details
- Myers, Kyle. "The Elasticity of Science." American Economic Journal: Applied Economics 12, no. 4 (October 2020): 103–134. View Details
- Myers, Kyle, and Mark Pauly. "Endogenous Productivity of Demand-Induced R&D: Evidence from Pharmaceuticals." RAND Journal of Economics 50, no. 3 (Fall 2019): 591–614. View Details
- Book Chapters
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- Myers, Kyle, and Mark Pauly. "Pharmaceutical Trends, Not What They Seem." In Managing Discovery in the Life Sciences: Harnessing Creativity to Drive Biomedical Innovation, by Philip A. Rea, Mark V. Pauly, and Lawton R. Burns, 18–42. Cambridge: Cambridge University Press, 2018. View Details
- Working Papers
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- Krieger, Joshua L., Kyle R. Myers, and Ariel D. Stern. "How Important Is Editorial Gatekeeping? Evidence from Top Biomedical Journals." Harvard Business School Working Paper, No. 22-011, September 2021. (Revised January 2023. Accepted at Review of Economics and Statistics.) View Details
- Myers, Kyle, Matt Grennan, Ashley Swanson, and Aaron K. Chatterji. "When Firms Sell To and Through Experts: An Empirical Case Study of Physician Prescribing." Working Paper, May 2020. View Details
- Cases and Teaching Materials
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- Greenstein, Shane, Kyle R. Myers, and Sarah Mehta. "Digital Manufacturing at Amgen." Harvard Business School Teaching Note 622-013, March 2022. View Details
- Myers, Kyle, Matt Grennan, and Sarah Mehta. "Kermit PPI." Harvard Business School Case 622-007, November 2021. View Details
- Greenstein, Shane, Kyle R. Myers, and Sarah Mehta. "Digital Manufacturing at Amgen." Harvard Business School Case 621-008, February 2021. View Details
- Huckman, Robert S., Karim R. Lakhani, and Kyle R. Myers. "X: The Foghorn Decision." Harvard Business School Case 618-060, March 2018. View Details
- Research Summary
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Professor Myers studies the economics of what determines the rate and direction of innovation. He has examined the reallocation of scientists through the use of targeted research grants at the National Institutes of Health, and is working to further understand how scientists choose their pursuits, and how policies and organizations can influence this. Professor Myers has also researched the dramatic growth in R&D in the pharmaceutical industry, drawing on traditional economic theories of scarce resources to explain productivity declines during periods of demand growth. He is also currently investigating how industry-physician interactions influence physicians’ treatment choices and the type of research they conduct. Though his current research is based in the health care sector, Professor Myers is interested in exploring the economics of innovation in many different high-technology industries.Keywords: Technology Networks; Commercialization; Science-Based Business; Research and Development; Knowledge Management; Patents; Innovation Strategy; Technological Innovation; Health Care and Treatment; Entrepreneurship; Health; Innovation and Invention; Science; Technology; Knowledge; Intellectual Property; Economics; Microeconomics; Biotechnology Industry; Health Industry; Pharmaceutical Industry; Technology Industry
- Additional Information
- Areas of Interest
- In The News
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