The impact of Medicare Part D on pharmaceutical R&D

"Recent evidence suggests that Medicare Part D has increased prescription drug use among the elderly, and earlier studies have indicated that increasing market size induces pharmaceutical innovation. This paper assesses the impact of Medicare Part D on pharmaceutical research and development (R&D), using time-series data on the number of drugs in preclinical and clinical development by therapeutic class. We demonstrate that the passage of Medicare Part D was associated with significant increases in pharmaceutical R&D, especially for classes with high elderly market share"--National Bureau of Economic Research web site.