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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.

Suggested Citation

  • Frank R. Lichtenberg, 2012. "The Effect of Pharmaceutical Innovation on Longevity: Patient-Level Evidence from the 1996-2002 Medical Expenditure Panel Survey and Linked Mortality Public-Use Files," NBER Working Papers 18552, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:18552
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    References listed on IDEAS

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    1. Duggan Mark G & Evans William N, 2008. "Estimating the Impact of Medical Innovation: A Case Study of HIV Antiretroviral Treatments," Forum for Health Economics & Policy, De Gruyter, vol. 11(2), pages 1-39, January.
    2. Timothy F. Bresnahan & Robert J. Gordon, 1996. "The Economics of New Goods," NBER Books, National Bureau of Economic Research, Inc, number bres96-1, January.
    3. 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.
    4. Adriana Lleras-Muney, 2005. "The Relationship Between Education and Adult Mortality in the United States," Review of Economic Studies, Oxford University Press, vol. 72(1), pages 189-221.
    5. 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.
    6. 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.
    7. Timothy F. Bresnahan & Robert J. Gordon, 1996. "Introduction to "The Economics of New Goods"," NBER Chapters,in: The Economics of New Goods, pages 1-26 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Hostenkamp, Gisela & Lichtenberg, Frank R., 2015. "The impact of recent chemotherapy innovation on the longevity of myeloma patients: US and international evidence," Social Science & Medicine, Elsevier, vol. 130(C), pages 162-171.
    2. Frank R. Lichtenberg, 2015. "Pharmaceutical Innovation, Longevity, and Medical Expenditure in Greece, 1995-2010," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 22(2), pages 277-299, July.
    3. Lane, Julia I. & Owen-Smith, Jason & Rosen, Rebecca F. & Weinberg, Bruce A., 2015. "New linked data on research investments: Scientific workforce, productivity, and public value," Research Policy, Elsevier, vol. 44(9), pages 1659-1671.
    4. Frank R. Lichtenberg, 2017. "How Cost-Effective Are New Cancer Drugs in the U.S.?," CESifo Working Paper Series 6683, CESifo Group Munich.
    5. 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.
    6. repec:spr:laecrv:v:26:y:2017:i:1:d:10.1007_s40503-017-0045-6 is not listed on IDEAS

    More about this item

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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