Undergraduate Honors Theses

Thesis Defended

Spring 2019

Document Type

Thesis

Type of Thesis

Departmental Honors

Department

Economics

First Advisor

Dr. Murat Iyigun

Abstract

In this study, I examine the effects of Medicaid expansion following the passing of the Affordable Care Act (ACA) on investments into treatment for orphan diseases. Orphan drugs received special classification in 1983 with the passing of the Orphan Drug Act to incentivize research and development into creating treatments for diseases that affect small populations. The ACA, which passed on March 23, 2010, and the subsequent Medicaid expansion occurred at the state-level, but many states have not opted to expand their Medicaid programs. To ascertain the impact that Medicaid expansion had on investments into orphan drugs, I combine state level incidence data for orphan diseases by therapeutic class from disease-specific patient registries with state-level Medicaid expansion status data from the Kaiser Family Foundation. This allowed me to create therapeutic class specific ratios representing the proportion of a given class’ market that lies within Medicaid expanded states. This market ratio variable becomes the foundation for my analysis to determine whether or not therapeutic classes with more of their markets within expanded states have seen greater increases to their investment relative to therapeutic classes with less of their market in Medicaid-expanded states. Contrary to what was expected, the results of this study indicate that there is a detrimental effect to investments of having a higher Market Expansion Ratio.

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