Document Type

Working Paper

Publication Date

7-17-2019

SSRN Discipline

PSN Subject Matter eJournals; Political Economy - Comparative eJournals; Experimental & Empirical Studies eJournals; LSN Subject Matter eJournals; Health Economics Network; Law School Research Papers - Law & Economics; Legal Scholarship Network; HEN Subject Matter eJournals; Law School Research Papers - Legal Studies; Law & Society eJournals; Law & Society: Private Law eJournals; Political Science Network; Health Law eJournals

Abstract

The Supreme Courts decision in Riegel v Medtronic unexpectedly and immediately immunized medical device manufacturers from certain types of state tort liability Riegel immunized manufacturers from liability if their devices had been approved through the Food and Drug Administrations most rigorousand costlyreview process premarket approval PMA Exploiting this unanticipated decision we examine whether manufacturers strategically respond to this new immunity We find evidence that following the Riegel decision device manufacturers file more PMA applications for high risk product categories relative to the comparable change for low risk categories suggesting that firms are sensitive to the newly immunized risk We additionally find evidence that physician treatment patterns with respect to medical devices also change consistent with Riegel shifting liability away from device manufacturers and towards physicians The analysis provides evidence that sophisticated actors respond to changes in their expected legal liability and that technical legal decisions have important ramifications for the provision of health care

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