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The Economic Benefits of Life Science Innovation


The Economic Benefits of Life Science Innovation

We often hear from advocates of weak intellectual property regimes for medicines that they are needed to increase access. Weakening incentives to innovate, however, will have serious repercussions on our future health and economic outcomes. A recent study on Sweden provides a unique opportunity to see what the world would look like if pharmaceutical and biotech innovation had suddenly stopped for 13 years, which is what is likely if IP protections were taken away.

The recent study by Lichtenburg and Pettersson attempted to measure the impact of new drugs on life expectancy in Sweden. Aggregate level data was collected on drugs released since 1997 and changes in mortality rates for various diseases. Using differences-in-differences methodology, the authors calculate an estimate of what health results in the country would look like if doctors and hospitals were constrained to only using medicines and technology created before 1997.

Between 1997 and 2010, the average age of death in Sweden rose by 1.88 years. The authors estimate that pharmaceutical innovation is responsible for 5.6 months of this increase. Moreover, the study estimates that if no new

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