2008], “Doctors, $$ and Drug Development: The Rise for For-Profit Experimental Medicine”, paper presented at the National Bureau of Economic Research Conference, The Location of Biopharmaceutical Activity

Over the past 15 years, academic medical centers have ceased to be the preferred locus of industry-sponsored clinical trial activity. Instead, clinical trials have increasingly been con-ducted in private practices and for-profit, dedicated study sites. On the demand side, the greater availability of non-academic investigators enabled pharmaceutical firms to better match physicians ’ skills with specific projects. On the supply side, the growth of managed care health insurance has contributed to a rise in the number of physicians working in the for-profit clinical trials industry. Using a unique panel dataset based on information about 97,225 clinical trial contracts granted between 1991 and 2003, we first show that the proportion of academic in-vestigators in a clinical trial correlates with project characteristics that plausibly proxy for the importance of knowledge-production activities. Second, we show that high managed care en-rollment in a county is associated with more for-profit clinical research activity in that county, but not with academic clinical research in that same county. The result is strengthened when we instrument managed care enrollment with the passage of state-level “small group ” insurance mandates