Journal of health economics
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A whiplash is a sudden acceleration-deceleration of the neck and head, typically associated with a rear-end car collision that may produce injuries in the soft tissue. Often there are no objective signs or symptoms of injury, and diagnosing lasting whiplash-associated disorders (WAD) is difficult, in particular for individuals with mild or moderate injuries. This leaves a scope for compensation-seeking behaviour. ⋯ This suggests that moderate injuries tend to be chronic, and that compensation-seeking behaviour is not the main explanation for this group. We find that claimants with chronic WADs used more health care in the year prior to the whiplash than claimants with non-chronic cases. This suggests that lower initial health capital increases the risk that a whiplash causes persistent WAD.
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The Orphan Drug Act (ODA) was designed to spur the development of drugs for rare diseases. In principle, its design also incentivizes pharmaceutical firms to develop drugs for "rare" subdivisions of more prevalent diseases. ⋯ I also find that 10-percent of the innovation in subdivided disease drugs induced by the ODA would have been conducted without the policy. While modest in size, this inefficiency suggests that agency problems should be considered when designing innovation policy.