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The Effect of Pharmaceutical Innovation on Longevity: Patient-Level Evidence from the 1996-2002 Medical Expenditure Panel Survey and Linked Mortality Public-Use Files

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  • Frank R. Lichtenberg

Abstract

We investigate the effect of the vintage (year of FDA approval) of the prescription drugs used by an individual on his or her survival and medical expenditure. When we only control for age, sex, and interview year, we estimate that a one-year increase in drug vintage increases life expectancy by 0.52%. Controlling for other variables including activity limitations, race, education, family income as a percent of the poverty line, insurance coverage, Census region, BMI, smoking and over 100 medical conditions has virtually no effect on the estimate of the effect of drug vintage on life expectancy. 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.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18552.

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Date of creation: Nov 2012
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Publication status: published as Lichtenberg Frank R., 2013. "The Effect of Pharmaceutical Innovation on Longevity: Patient Level Evidence from the 1996–2002 Medical Expenditure Panel Survey and Linked Mortality Public-use Files," Forum for Health Economics & Policy, De Gruyter, vol. 16(1), pages 1-33, January.
Handle: RePEc:nbr:nberwo:18552

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  1. Frank R. Lichtenberg, 2012. "Contribution of Pharmaceutical Innovation to Longevity Growth in Germany and France, 2001-7," PharmacoEconomics, Springer Healthcare | Adis, Springer Healthcare | Adis, vol. 30(3), pages 197-211.
  2. Frank Lichtenberg, 2011. "The quality of medical care, behavioral risk factors, and longevity growth," International Journal of Health Care Finance and Economics, Springer, Springer, vol. 11(1), pages 1-34, March.
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Cited by:
  1. Lichtenberg, Frank R., 2014. "The impact of pharmaceutical innovation on longevity and medical expenditure in France, 2000–2009," Economics & Human Biology, Elsevier, Elsevier, vol. 13(C), pages 107-127.

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