Pharmaceuticals and Digital Health: Evidence from Data-driven Insights on the Insulin Market

Résumé

Digital health technologies, such as Continuous Glucose Monitors (CGMs), are transforming the availability of patient-level data, potentially influencing other healthcare markets. This paper examines how CGMs influence the insulin market, shedding light on the impact of digital health technologies on phar maceutical demand, pricing, and innovation incentives. I develop and estimate a tractable model of supply and demand for insulin, embedding: (i) patient specific learning about treatment performance through CGMs, (ii) physician level learning about new insulin products from patient experiences, and (iii) price bargaining between pharmaceutical companies and the regulator. Using medical claims data from France, I find that CGMs’ patient-specific informa tion steered insulin demand toward newer products, with limited spillover to nonusers. Manufacturers of drugs that benefited from higher perceived qual ity could negotiate higher prices. My findings indicate that introducing these newly observable product attributes into pharmaceutical demand shifts the rel ative profitability of drug innovation strategies, thereby shaping the direction of future pharmaceutical innovation.