Medical Innovation and Health Inequality: Evidence from Direct-Acting Antivirals

We study racial heterogeneity in innovation-induced externalities. Following the introduction of direct-acting antivirals (DAA) for Hepatitis C (HCV+), we show that liver transplants increased for Black (11.9%), Hispanic (34.2%), and white (56.6%) HCV- end-stage liver disease (ESLD) patients. However, only white HCV- ESLD patients saw an increase in the rate of transplantation (19.5 pp), in spite of the fact that marginal white registrants were of better liver health relative to marginal Black registrants. We conclude that HCV+ ESLD patients from most racial groups benefited from the externality generated by DAAs for HCV+ (with the clear exception of Asian patients) but that their introduction likely widened disparities in transplant outcomes between white and non-white patients.