Is newer always better? Re-evaluating the benefits of newer pharmaceuticals
Whether newer pharmaceuticals justify their higher costs by reducing other health expenditures has generated significant debate. We replicate a frequently cited paper by Lichtenberg on drug "offsets" and find the results disappear using a more appropriate model or updated dataset. Further, we test the suitability of similar methods using newer hypertension drugs. We find our observational results run counter to well-established clinical evidence on comparative efficacy and conclude that our model, as well as other studies that do not adequately control for unobserved characteristics that jointly determine drug choice and health expenditures, are likely subject to significant bias.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Amitabh Chandra & Jonathan Gruber & Robin McKnight, 2007. "Patient Cost-Sharing, Hospitalization Offsets, and the Design of Optimal Health Insurance for the Elderly," NBER Working Papers 12972, National Bureau of Economic Research, Inc.
- David M. Cutler & Mark McClellan & Joseph P. Newhouse & Dahlia Remler, 1998. "Are Medical Prices Declining? Evidence from Heart Attack Treatments," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 991-1024.
- Frank R. Lichtenberg, 2007.
"Benefits and costs of newer drugs: an update,"
Managerial and Decision Economics,
John Wiley & Sons, Ltd., vol. 28(4-5), pages 485-490.
- Gaynor Martin & Li Jian & Vogt William B, 2007. "Substitution, Spending Offsets, and Prescription Drug Benefit Design," Forum for Health Economics & Policy, De Gruyter, vol. 10(2), pages 1-33, July.
- Duggan, Mark, 2005. "Do new prescription drugs pay for themselves?: The case of second-generation antipsychotics," Journal of Health Economics, Elsevier, vol. 24(1), pages 1-31, January.
- Duan, Naihua, et al, 1983. "A Comparison of Alternative Models for the Demand for Medical Care," Journal of Business & Economic Statistics, American Statistical Association, vol. 1(2), pages 115-126, April.
- Frank R. Lichtenberg, 2004. "The Effect of Drug Vintage on Survival: Micro Evidence from Puerto Rico's Medicaid Program," NBER Working Papers 10884, National Bureau of Economic Research, Inc.
- Richard G. Frank & Thomas G. McGuire & Sharon-Lise Normand, 2006. "Cost-Offsets of New Medications for Treatment of Schizophrenia," NBER Working Papers 12643, National Bureau of Economic Research, Inc.
- Anirban Basu & Willard G. Manning & John Mullahy, 2004. "Comparing alternative models: log vs Cox proportional hazard?," Health Economics, John Wiley & Sons, Ltd., vol. 13(8), pages 749-765.
- Buntin, Melinda Beeuwkes & Zaslavsky, Alan M., 2004. "Too much ado about two-part models and transformation?: Comparing methods of modeling Medicare expenditures," Journal of Health Economics, Elsevier, vol. 23(3), pages 525-542, May.
- Willard G. Manning & John Mullahy, 1999.
"Estimating Log Models: To Transform or Not to Transform?,"
NBER Technical Working Papers
0246, National Bureau of Economic Research, Inc.
- Manning, Willard G. & Mullahy, John, 2001. "Estimating log models: to transform or not to transform?," Journal of Health Economics, Elsevier, vol. 20(4), pages 461-494, July.
When requesting a correction, please mention this item's handle: RePEc:eee:jhecon:v:29:y:2010:i:5:p:743-750. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.