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Pharmaceutical Innovation, Longevity, and Medical Expenditure in Greece, 1995-2010

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  • Frank Lichtenberg

Abstract

Longitudinal, disease-level data are used to analyze the impact of pharmaceutical innovation on longevity (mean age at death), hospital utilization, and medical expenditure in Greece during the period 1995-2010. The estimates indicate that pharmaceutical innovation increased mean age at death by 0.87 years (10.4 months)-—about 44% of the total increase in longevity—-and that diseases with larger increases in the cumulative number of drugs launched 1-4 years earlier had smaller increases in the number of hospital days. Real per capita pharmaceutical expenditure increased rapidly during this period, but 62% of the increase in pharmaceutical expenditure was offset by a reduction in hospital expenditure attributable to pharmaceutical innovation. The baseline estimate of the cost per life-year gained from pharmaceutical innovation in Greece is $17,117, which is a very small fraction of leading economists’ estimates of the value of (or consumers’ willingness to pay for) a one-year increase in life expectancy.

Suggested Citation

  • Frank Lichtenberg, 2015. "Pharmaceutical Innovation, Longevity, and Medical Expenditure in Greece, 1995-2010," CESifo Working Paper Series 5166, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_5166
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    References listed on IDEAS

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    1. Frank Lichtenberg, 2009. "The effect of new cancer drug approvals on the life expectancy of American cancer patients, 1978-2004," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 18(5), pages 407-428.
    2. Joseph E. Aldy & W. Kip Viscusi, 2008. "Adjusting the Value of a Statistical Life for Age and Cohort Effects," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 573-581, August.
    3. Lichtenberg Frank R., 2010. "Pharmaceutical Price Discrimination and Social Welfare," Capitalism and Society, De Gruyter, vol. 5(1), pages 1-32, July.
    4. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders in the Theory of Growth," Review of Economic Studies, Oxford University Press, vol. 58(1), pages 43-61.
    5. Frank Lichtenberg, 2011. "The quality of medical care, behavioral risk factors, and longevity growth," International Journal of Health Economics and Management, Springer, vol. 11(1), pages 1-34, March.
    6. 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.
    7. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
    8. Lichtenberg, Frank R., 2014. "The impact of pharmaceutical innovation on longevity and medical expenditure in France, 2000–2009," Economics & Human Biology, Elsevier, vol. 13(C), pages 107-127.
    9. Frank Lichtenberg, 2013. "The impact of new (orphan) drug approvals on premature mortality from rare diseases in the United States and France, 1999–2007," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(1), pages 41-56, February.
    10. Frank R. Lichtenberg & Gautier Duflos, 2008. "Pharmaceutical innovation and the longevity of Australians: a first look," NBER Working Papers 14009, National Bureau of Economic Research, Inc.
    11. Amitabh Chandra & Jonathan Gruber & Robin McKnight, 2010. "Patient Cost-Sharing and Hospitalization Offsets in the Elderly," American Economic Review, American Economic Association, vol. 100(1), pages 193-213, March.
    12. Frank R. Lichtenberg, 2007. "The Impact of New Drugs on US Longevity and Medical Expenditure, 1990–2003: Evidence from Longitudinal, Disease-Level Data," American Economic Review, American Economic Association, vol. 97(2), pages 438-443, May.
    13. Frank R. Lichtenberg, 2012. "Pharmaceutical Innovation and Longevity Growth in 30 Developing and High-income Countries, 2000-2009," NBER Working Papers 18235, National Bureau of Economic Research, Inc.
    14. Kevin M. Murphy & Robert H. Topel, 2006. "The Value of Health and Longevity," Journal of Political Economy, University of Chicago Press, vol. 114(5), pages 871-904, October.
    15. Frank Lichtenberg, 2012. "Contribution of Pharmaceutical Innovation to Longevity Growth in Germany and France, 2001–7," PharmacoEconomics, Springer, vol. 30(3), pages 197-211, March.
    16. Hercowitz, Zvi, 1998. "The 'embodiment' controversy: A review essay," Journal of Monetary Economics, Elsevier, vol. 41(1), pages 217-224, February.
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    More about this item

    Keywords

    pharmaceutical; innovation; longevity; Greece; hospital;

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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