Pharmaceutical Innovation and Longevity

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Recently, I wrote a piece outlining the big-benefits from big-pharma, and this last week another working paper hit the NBER stands highlighting even more starkly the real effect drug vintage is having on human life-expectancy.  No, we aren’t talking about immortality, but wouldn’t you like to have another 4 months to live with your friends and family? That is exactly what Frank Lichtenberg of Columbia University found was the increase in life-expectancy that can be directly attributed to the increases in drug vintage experienced between 1996 and 2003.

Lichtenberg, using exceptional data from individual patient records, “investigate[s] whether patients using newer drugs in a given year remain alive longer than patients using older drugs, controlling for many important patient characteristics.”

He finds that “between 1996 and 2003, the mean vintage of prescription drugs increased by 6.6 years. This is estimated to have increased life expectancy of elderly Americans by 0.41-0.47 years. This suggests that not less than two-thirds of the 0.6-year increase in the life expectancy of elderly Americans during 1996-2003 was due to the increase in drug vintage. The 1996-2003 increase in drug vintage is also estimated to have increased annual drug expenditure per elderly American by $207, and annual total medical expenditure per elderly American by $218. This implies that the incremental cost-effectiveness ratio (cost per life-year gained) of pharmaceutical innovation was about $12,900.”

This again debunks the myth that pharmaceutical companies aren’t providing real value to the economy.  As I’ve said before, many claim that “Big-Pharma” is simply in it for the money, and that they’ll push new drugs simply to boost profits, even if the drugs aren’t appropriate for the consumer.  Others argue that we should eliminate intellectual property protections to get lower price drugs, since there isn’t really that much innovation that has a real impact happening anyway.  The data reveals that this simply is not the case.

Let’s give credit where credit is due.  Pharmaceutical innovation is critical for not only our longevity, but in solving many of the systemic problems our society faces today including heart disease and mental illness.  Lichtenberg and others are showing us that they are doing just that; making headway in solving those problems.

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About the author

Justin Hicks joined ITIF in June of 2012 as Senior Economic Policy Analyst. Prior to joining the ITIF as Senior Economic Policy Analyst, Justin Hicks finished his Ph.D. in Economics at the University of California, Merced. His research focused on potential spillovers of cooperative R&D in the international setting as well as the impact of funding on R&D productivity in universities. In his current research, he looks to identify the effect of trade policy on the flow of ideas and home-country R&D productivity. His primary expertise lies in using applied microeconometrics to identify causal relationships using large data-sets. Prior to receiving his Ph.D., Justin achieved a M.A. in economics and a B.A. in Business economics from the University of California, Riverside.