The effect of newer drugs on health spending: do they really increase the costs?
AbstractWe analyze the influence of technological progress on pharmaceuticals on rising health expenditures using US State level panel data. Improvements in medical technology are believed to be partly responsible for rapidly rising health expenditures. Even if the technological progress in medicine improves health outcomes and life quality, it can also increase the expenditure on health care. Our findings suggest that newer drugs increase the spending on prescription drugs since they are usually more expensive than their predecessors. However, they lower the demand for other types of medical services, which causes the total spending to decline. We estimate that a 1-year decrease in the average age of prescribed drugs causes per capita health expenditures to decrease by $45.43. The biggest decline occurs in spending on hospital care due to newer drugs. Copyright © 2009 John Wiley & Sons, Ltd.
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Bibliographic InfoArticle provided by John Wiley & Sons, Ltd. in its journal Health Economics.
Volume (Year): 19 (2010)
Issue (Month): 5 ()
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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749
Other versions of this item:
- Civan, Abdülkadir & Koksal, Bulent, 2007. "The Effect of Newer Drugs on Health Spending: Do They Really Increase the Costs?," MPRA Paper 6846, University Library of Munich, Germany.
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- I10 - Health, Education, and Welfare - - Health - - - General
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