Pharmaceutical innovation and infant health: Palivizumab and RSV in California

The respiratory syncytial virus (RSV) is the leading cause of bronchiolitis and other lower respiratory diseases in infants and is also the foremost cause of hospitalizations of infants younger than one year of age. In 1998 palivizumab was approved, a drug designed to provide passive immunity against the virus for infants who have risk factors making them especially susceptible to severe RSV infections. Although the drug can never increase the likelihood of a severe RSV infection, infants who are born with well developed respiratory and immune systems receive no additional benefit from the drug, and because of the high price of the drug, with a full treatment regimen costing over ;This analysis uses the California Linked Birth and Inpatient Database to identify infants who are at risk for a severe RSV infection and who will benefit from the use of palivizumab, and examines subsequent admission records for the presence of RSV admissions. The empirical models used are based on the difference-in-differences framework and rely on the identification of specific risk factors that are present at birth. It is found that there were likely minimal improvements of infant health outcomes immediately after the introduction of the drug, although in 2002 and thereafter there are reductions in the RSV admission rate that can be attributed to the use of palivizumab. The results also show that there were little if any reductions in inpatient charges. Analysis is also conducted to establish how total RSV related spending, which includes both inpatient charges associated with RSV admissions and spending on palivizumab, varies with compliance rates. It is shown that high compliance rates result in utility maximizing outcomes when AAP guidelines are closely followed.