Has pharmaceutical innovation reduced the average cost of U.S. health care episodes?

A number of authors have argued that technological innovation has increased U.S. health care spending. We investigate the impact that pharmaceutical innovation had on the average cost of U.S. health care episodes during the period 2000-2014, using data from the Bureau of Economic Analysis' Health Care Satellite Account and other sources. We analyze the relationship across approximately 200 diseases between the growth in the number of drugs that have been approved to treat the disease and the subsequent growth in the mean amount spent per episode of care, controlling for the growth in the number of episodes and other factors. Our estimates indicate that mean episode cost is not significantly related to the number of drugs ever approved 0-4 years before, but it is significantly inversely related to the number of drugs ever approved 5-20 years before. This delay is consistent with the fact (which we document) that utilization of a drug is relatively low during the first few years after it was approved, and that some drugs may have to be consumed for several years to have their maximum impact on treatment cost. Our estimates of the effect of pharmaceutical innovation on the average cost of health care episodes are quite insensitive to the weights used and to whether we control for 3 covariates. Our most conservative estimates imply that the drugs approved during 1986-1999 reduced mean episode cost by 4.7%, and that the drugs approved during 1996-2009 reduced mean episode cost by 2.1%. If drug approvals did not affect the number of episodes, the drugs approved during 1986-1999 would have reduced 2014 medical expenditure by about $93 billion. However, drug approvals may have affected the number, as well as the average cost, of episodes. We also estimate models of hospital utilization. The number of hospital days is significantly inversely related to the number of drugs ever approved 10-19 years before, controlling for the number of disease episodes. Our estimates imply that the drugs approved during 1984-1997 reduced the number of hospital days by 10.5%. The hospital cost reduction was larger than expenditure on the drugs.

Number of drugs provided by the Pharmaceutical Benefits Scheme and mortality and hospital utilization in Australia, 2002-2019.

We analyze the relationship between long-run changes in the drugs provided by the Pharmaceutical Benefits Scheme (PBS) and mortality and hospital utilization in Australia, by analyzing the correlation across diseases between the change in the number of drugs used to treat the disease provided and the subsequent change in mortality or hospital utilization from that disease. Our estimates indicate that diseases for which there were larger increases in the number of PBS drugs tended to have smaller subsequent growth in premature (before ages 85, 75, and 65) mortality. Diseases for which there was larger growth in the number of PBS drugs also tended to have smaller growth in the number of hospital days 2-10 years later. The reduction in the number of hospital days appears to be primarily attributable to a reduction in average length of stay. We estimate that the 1996-2013 increase in the number of PBS drugs was associated with a reduction in the number of years of life lost before age 85 in 2019 of 359,026, and that the 1994-2011 increase in the number of PBS drugs was associated with a reduction in the number of hospital days in 2019 of 2.48 million. A rough estimate of the cost per life-year before age 85 gained in 2019 from drugs previously added to the PBS is $AUS 1388.

The Relationship Between Pharmaceutical Innovation and Cancer Mortality in Spain, From 1999 to 2016.

OBJECTIVES: To investigate the relationship across cancer sites between pharmaceutical innovation and changes in cancer mortality in Spain during the period between 1999 and 2016. METHODS: I investigated whether the cancer sites for which more new drugs were authorized had larger reductions in mortality from 1999 to 2016 in Spain, controlling for the lagged change in cancer incidence. The principal measure of pharmaceutical innovation is the long-run change in the mean vintage (year of initial authorization in Spain) of the drugs for the treatment of a cancer previously authorized in Spain. RESULTS: The 1999 to 2016 increase in mean age at death tended to be larger, and the 1999 to 2016 increase in the number of deaths and life-years lost before the ages 65 years, 75 years, and 85 years tended to be smaller for cancer sites that had larger current or lagged increases in drug vintage. Pharmaceutical innovation was associated with a 2.77-year increase in mean age at death from cancer from 1999 to 2016-96% of the observed increase. New drug authorization during the previous 17 years were associated with a reduction in the number of life-years lost before the age of 75 years in 2016 of 333 000. Under the assumption that the association between pharmaceutical innovation and mortality reduction is causal, estimated drug expenditure per life year before the age of 75 years gained in 2016 from new cancer drugs that were authorized between 2000 and 2016 was €3269. CONCLUSIONS: The cancer sites for which there were more pharmaceutical innovation-more new drugs authorized-had larger 1999 to 2016 reductions in mortality in Spain, controlling for the lagged change in cancer incidence.

The effect of pharmaceutical innovation on longevity: Evidence from the U.S. and 26 high-income countries.

This study examines the impact that pharmaceutical innovation, which accounts for most private biomedical research expenditure, has had on longevity. We perform two types of two-way fixed-effects analyses, which control for the effects of many potentially confounding variables. First, we analyze long-run (2006-2018) changes in longevity associated with different diseases in a single country: the U.S. Then, we analyze relative longevity levels associated with different diseases in 26 high-income countries during a single time period (2006-2016). The measure of longevity we analyze, mean age at time of death, is strongly positively correlated across countries with life expectancy at birth. The measure of pharmaceutical innovation we use is the mean vintage (year of initial world launch) of the drugs used to treat each disease in each country. Changes in the vintage distribution of drugs are due to both entry of new drugs and exit of old drugs. Our analysis of U.S. data indicates that the diseases for which there were larger increases in drug vintage tended to have larger increases in the longevity of Americans of all races and both sexes. In other words, the lower the mean age of the drugs, the higher the mean age at death. We test, and are unable to reject, the "parallel trends" hypothesis. We estimate that the 2006-2018 increase in drug vintage increased the mean age at death of Americans by about 6 months (66% of the observed increase). Controlling for sex, race, and education has only a small effect on the estimate of the vintage coefficient. The estimates indicate that drug vintage did not have a significant effect on the mean age at death of decedents with less than 9 years of education. Drug vintage had a positive and significant effect on the mean age at death of decedents with at least 9 years of education, and a larger effect on the mean age at death of decedents with at least 13 years of education. The finding that pharmaceutical innovation has a larger effect on the longevity of people with more education is consistent with previous evidence that more educated people are more likely to use newer drugs. Our analysis of data on 26 high-income countries indicates that the higher the vintage of drugs available to treat a disease in a country, the higher mean age at death was, controlling for fixed disease and country effects. The increase in drug vintage is estimated to have increased mean age at death in the 26 countries by 1.23 years between 2006 and 2016-73% of the observed increase. We obtain estimates of the cost of pharmaceutical innovation-its impact on drug expenditure-as well as estimates of an important benefit of pharmaceutical innovation-the number of life-years gained from it-and of their ratio, i.e., the incremental cost-effectiveness ratio. Estimates of the cost per life-year gained for the U.S. and the 26 countries are $35,817 and $13,904, respectively. Both figures are well below per capita GDP in the respective regions, suggesting that, overall, pharmaceutical innovation was highly cost-effective.

Are drug prices subject to creative destruction? Evidence from the US, 1997-2017.

There are several types of pharmaceutical competition. In addition to competition among producers of the same chemical substance ("within-substance competition"), there may be competition among producers of different chemical substances in the same chemical subgroup ("between-substance competition"). There have been numerous econometric studies of the effect of within-substance competition on drug prices, but empirical evidence about the effect of between-substance competition is far more limited. The primary objective of this study is to assess the impact of the entry of new drugs in a drug's therapeutic class on branded drug prices, generic drug prices, and the generic market share, using publicly-available US data for the period 1997-2017. Two methods are used to estimate the effects of between-substance and within-substance competition on those variables. The first method is standard 2-way fixed effects estimation based on aggregate data. The second method, based on micro data, is estimation using the DID_MULTIPLEGT procedure developed by de Chaisemartin et al. (2021), which does not rely on, and allows us to test for, "parallel trends." Between-substance competition does not appear to have any effect on brand-name drug prices, although our inability to fully account for rebates may bias the estimates towards zero. (There is also little evidence for an effect of within-substance competition on brand-name drug prices.) However, between-substance competition has a significant negative effect on generic drug prices. We estimate that the 1985-2005 increase in the number of substances ever registered in a drug's ATC4 chemical subgroup reduced the 2017 price of generic drugs by 42%. (The ratio of the generic-price reduction attributable to rising between-substance competition to the generic-price reduction attributable to rising within-substance competition also happens to be 42%.) A striking finding is that the entry of imitators has no effect on the prices of brand-name drugs, but the entry of innovators has a significant negative effect on the prices of generic drugs in the same ATC4 chemical subgroup. In addition, between-substance competition has a significant positive effect on the generic market share: the 1985-2005 increase in the number of substances ever registered in a drug's ATC4 chemical subgroup increased the 2017 generic market share by 15.0 percentage points. Due to its effects on generic drug prices and the generic market share, the 1985-2005 increase in between-substance competition reduced the average 2017 price of drugs that were already sold in 1997 by 35%. We estimate that 36% of 2017 expenditure on drugs that were first registered during 1986-2005 was offset by reduced 2017 expenditure on drugs that were sold in both 1997 and 2017.

The impact of pharmaceutical innovation on the longevity and hospitalization of New Zealand cancer patients, 1998-2017.

BACKGROUND: We investigate whether the cancer sites that experienced more pharmaceutical innovation in New Zealand had larger subsequent declines in premature mortality and hospitalization rates and larger subsequent increases in 5-year survival rates, controlling for changes in incidence. RESEARCH DESIGN AND METHODS: We estimate the effects of the number of WHO ATC5 chemical substances and ATC4 chemical subgroups approved on the number of years of potential life lost before ages 85, 75, 65, 5-year relative survival rates, and the number of inpatient hospital discharges, by estimating difference-in-differences (2-way fixed-effects) models using aggregate longitudinal data on 23 cancer sites. RESULTS: Substances/subgroups approved during 1985-2001 reduced the number of years of potential life lost before age 85 (YPLL85) in 2017 by 67%. Those substances/subgroups reduced YPLL75 and YPLL65 in 2017 by similar percentages. The odds of surviving at least 5 years after diagnosis are significantly positively related to the number of substances previously approved. CONCLUSIONS: The cost per life-year before age 85 gained in 2017 from previous drug approvals did not exceed 1719 USD. The WHO considers interventions whose cost per quality-adjusted life-year gained is less than per capita GDP to be highly cost-effective; New Zealand's per capita GDP in 2017 was 42,260 USD. capita GDP in 2017 was 42,260 USD. EXPERT OPINION: Pharmaceutical innovation-the introduction and use of new drugs-substantially increased cancer survival rates in New Zealand, and substantially reduced premature (before ages 85, 75, and 65) cancer mortality there during the period 1998-2017. Moreover, overall the new cancer drugs were highly costeffective. The drugs approved during 1985-2001 are estimated to have reduced the number of years of potential life lost before age 85 in 2017 by 244,876. Even if previous drug approvals increased the cost of hospital discharges and other medical costs, the cost per life-year before age 85 gained in 2017 from those approvals could not have exceeded 1719 USD.

The Impact of Biopharmaceutical Innovation on Disability, Social Security Recipiency, and Use of Medical Care of U.S. Community Residents, 1998-2015.

This study seeks to analyze the overall impact that biopharmaceutical innovation had on disability, Social Security recipiency, and the use of medical services of U.S. community residents during the period 1998-2015. We test the hypothesis that the probability of disability, Social Security recipiency, and medical care utilization associated with a medical condition is inversely related to the number of drug classes previously approved for that condition. We use data from the 1998-2015 waves of the Medical Expenditure Panel Survey and other sources to estimate probit models of an individual's probability of disability, Social Security recipiency, and medical care utilization. The effect of biopharmaceutical innovation is identified by differences across over 200 medical conditions in the growth in the lagged number of drug classes ever approved. 18 years of previous biopharmaceutical innovation is estimated to have reduced: the number of people who were completely unable to work at a job, do housework, or go to school in 2015 by 4.5%; the number of people with cognitive limitations by 3.2%; the number of people receiving SSI in 2015 by 247 thousand (3.1%); and the number of people receiving Social Security by 984 thousand (2.0%). Previous innovation is also estimated to have caused reductions in home health visits (9.2%), inpatient events (5.7%), missed school days (5.1%), and outpatient events (4.1%). The estimated value in 2015 of some of the reductions in disability, Social Security recipiency, and use of medical care attributable to previous biopharmaceutical innovation ($115 billion) is fairly close to 2015 expenditure on drug classes that were first approved by the FDA during 1989-2006 ($127 billion). However, for a number of reasons, the costs are likely to be lower, and the benefits are likely to be larger, than these figures.

Are patients more adherent to newer drugs?

The annual preventable cost from non-adherence in the US health care system amounts to $100 billion. While the relationship between adherence and the health system, the condition, patient characteristics and socioeconomic factors are established, the role of the heterogeneous productivity of drug treatment remains ambiguous. In this study, we perform cross-sectional retrospective analyses to study whether patients who use newer drugs are more adherent to pharmacotherapy than patients using older drugs within the same therapeutic class, accounting for unobserved heterogeneity at the individual level (e.g. healthy adherer bias). We use US Marketscan commercial claims and encounters data for 2008-2013 on patients initiating therapy for five chronic conditions. Productivity is captured by a drug's earliest Food and Drug Administration (FDA) approval year ("drug vintage") and by FDA" therapeutic potential" designation. We control for situational factors as promotional activity, copayments and distribution channel. A 10-year increase in mean drug vintage is associated with a 2.5 percentage-point increase in adherence. FDA priority status, promotional activity and the share of mail-order prescription fills positively influenced adherence, while co-payments had a negative effect. Newer drugs not only may be more effective in terms of clinical benefits, on average. They provide means to ease drug therapy to increase adherence levels as one component of drug quality, a notion physicians and pharmacy benefit managers should be aware of.

The impact of pharmaceutical innovation on the burden of disease in Ireland, 2000-2015.

BACKGROUND: We perform an econometric assessment of the impact that pharmaceutical innovation had on the burden of disease in Ireland. METHODS: We use a difference-in-differences (or two-way fixed effects) research design: we investigate whether diseases for which more new drugs were launched had larger subsequent reductions in mortality. This design controls for the effects of general economic and societal factors (e.g. income, education, and behavioral risk factors), to the extent that those effects are similar across diseases. RESULTS: New Chemical Entities launched during 1983-1997 are estimated to have reduced the total number of disability-adjusted life-years (DALYs) lost in 2015 by about 234 600. CONCLUSIONS: Pharmaceutical expenditure per DALY gained in 2015 from drugs launched during 1983-1997 was €1137, which indicates that the new drugs launched during 1983-1997 were very cost-effective, overall.

How cost-effective are new cancer drugs in the U.S.?

Introduction: More than 8 times as many new cancer drugs were approved during 2005-2015 as were approved during 1975-1985 (66 vs. 8). The average annual 2010-2014 growth rate of U.S. cancer drug expenditure was 7.6%. This has contributed to a lively debate about the value and cost-effectiveness of new cancer drugs.Areas covered: We assess the average cost-effectiveness in the U.S. in 2014 of new cancer drugs approved by the FDA during 2000-2014, by performing an original econometric investigation (rather than a literature review) of whether there were larger declines in premature mortality and hospitalization, and larger increases in survival, from the cancers that had larger increases in the number of drugs ever approved, controlling for the change in cancer incidence and mean age at time of diagnosis.Expert opinion: Cancer drugs approved during 2000-2014 are estimated to have reduced the number of potential years of life lost before age 75 in 2014 by 719,133. Cancer drugs approved during 1989-2005 are estimated to have reduced hospital cost in 2013 by $4.8 billion. Our baseline estimate of the cost per life-year gained in 2014 from cancer drugs approved during 2000-2014 is $7853.

The impact of pharmaceutical innovation on the burden of disease in Canada, 2000-2016.

We perform an econometric assessment of the role that pharmaceutical innovation-the introduction and use of new drugs-has played in reducing the burden of disease in Canada, by investigating whether diseases for which more new drugs were launched had larger subsequent reductions in disease burden. Since utilization of a drug reaches a peak about 12-14 years after it was launched, we allow for considerable lags in the relationship between new drug launches and the burden of disease. We analyze the impact of new drug launches on a comprehensive measure of disease burden-the age-standardized disability-adjusted life-years lost (DALY) rate-and on its two components: the age-standardized years of life lost (YLL) and years lost to disability (YLD) rates. We also analyze the impact of new drug launches on the number of hospital discharges and on the average length of hospital stays. The number of DALYs lost is significantly inversely related to the number of drugs that had ever been launched 9-20 years earlier, and the number of YLLs is significantly inversely related to the number of drugs that had ever been launched 11-20 years earlier. The launch of a drug has the largest (most negative) impact on the number of DALYs and YLLs 15 years after it was launched. The estimates indicate that if no drugs had been launched during 1986-2001, the age-standardized DALY rate would not have declined between 2000 and 2016; it might even have increased. Almost all (93%) of the reduction in DALYs was due to a reduction in YLL. The estimates imply that new drug launches during 1986-2001 reduced DALYs in 2016 by 21%, reduced YLLs in 2016 by 28%, and reduced YLDs in 2016 by 3%. We estimate that drugs launched during 1986-2001 reduced the number of DALYs lost in 2016 by 2.31 million. Expenditure in 2016 on drugs launched during 1986-2001 per DALY gained in 2016 from those drugs was 2842 USD. Interventions that avert one DALY for less than average per capita income for a given country or region are generally considered to be very cost-effective; Canada's per capita GDP was 42,158 USD in 2016, so our estimates indicate that the new drugs launched during 1986-2001 were very cost-effective, overall. Moreover, 2842 USD may be an overestimate of the true net cost in 2016 per DALY of drugs launched during 1986-2001. A previous study based on U.S. data showed that about 25% of the cost of new drugs is offset by reduced expenditure on old drugs. Also, our estimates indicate that, if no drugs had been launched during 1986-2001, the average length of 2016 hospital stays would have been about 16% higher. The reduction in hospital expenditure due to shorter average length of stay may have been larger than the expenditure on the drugs responsible for shorter hospital stays.

The Impact of New Drug Launches on Hospitalization in 2015 for 67 Medical Conditions in 15 OECD Countries: A Two-Way Fixed-Effects Analysis.

There are two types of prescription drug cost offsets. The first type of cost offset - from prescription drug use - is primarily about the effect of changes in drug quantity (e.g. due to changes in out-of-pocket drug costs) on other medical costs. Previous studies indicate that the cost offsets from prescription drug use may slightly exceed the cost of the drugs themselves. The second type of cost offset - the cost offset from prescription drug innovation - is primarily about the effect of prescription drug quality on other medical costs. Two previous studies (of a single disease or a single country) found that pharmaceutical innovation reduced hospitalization, and that the reduction in hospital cost from the use of newer drugs was considerably greater than the innovation-induced increase in pharmaceutical expenditure. In this study, we reexamine the impact that pharmaceutical innovation has had on hospitalization, employing a different type of 2-way fixed effects research design. In lieu of analyzing different countries over time for a single disease, or different diseases over time for a single country, we estimate the impact that new drug launches that occurred during the period 1982-2015 had on hospitalization in 2015 for 67 diseases in 15 OECD countries. Our models include both country fixed effects and disease fixed effects, which control for the average propensity of people to be hospitalized in each country and from each disease. The number of hospital discharges and days of care in 2015 is significantly inversely related to the number of drugs launched during 1982-2005, but not significantly related to the number of drugs launched after 2005. (Utilization of drugs during the first few years after they are launched is relatively low, and drugs for chronic conditions may have to be consumed for several years to achieve full effectiveness.) The estimates imply that, if no new drugs had been launched after 1981, total days of care in 2015 would have been 163% higher than it actually was. The estimated reduction in 2015 hospital expenditure that may be attributable to post-1981 drug launches was 5.3 times as large as 2015 expenditure on those drugs.

How many life-years have new drugs saved? A three-way fixed-effects analysis of 66 diseases in 27 countries, 2000-2013.

BACKGROUND: We analyzed the role that the launch of new drugs has played in reducing the number of years of life lost (YLL) before three different ages (85, 70 and 55 y) due to 66 diseases in 27 countries. METHODS: We estimated two-way fixed-effects models of the rate of decline of the disease- and country-specific age-standardized YLL rate. The models control for the average decline in the YLL rate in each country and from each disease. RESULTS: One additional drug launch 0-11 y before year t is estimated to have reduced the pre-age-85 y YLL rate (YLL85) in year t by 3.0%, and one additional drug launch ≥12 y before year t is estimated to have reduced YLL85 by 5.5%. (A drug's utilization peaks 8-10 y after it is launched.) Controlling for the number of drugs previously launched, YLL rates are unrelated to the number of drug classes previously launched. CONCLUSIONS: The estimates imply that, if no new drugs had been launched after 1981, YLL85 in 2013 would have been 2.16 times as high as it actually was. We estimated that pharmaceutical expenditure per life-year saved before age 85 y in 2013 by post-1981 drugs was $2837. This amount is about 8% of per capita GDP, indicating that post-1981 drugs launched were very cost-effective overall. But the fact that an intervention is cost-effective does not necessarily mean that it is 'affordable.'

The impact of access to prescription drugs on disability in eleven European countries.

BACKGROUND: Clinical studies have shown that the use of certain drugs can reduce disability. Access to prescription drugs varies across countries. Even when the total number of drugs launched in two countries is similar, the specific drugs that were launched, and the diseases those drugs are used to treat, may differ. OBJECTIVE/HYPOTHESIS: We test the hypothesis that the larger the relative number of drugs for a disease that were launched during 1982-2015 in a country, the lower the relative disability in 2015 of patients with that disease in that country, controlling for the average level of disability in that country and from that disease, and the number of patients with the disease and their mean age. METHODS: We estimate two-way (by country and disease) fixed-effects models of several measures of disability for 31 diseases in eleven European countries using data from the Survey of Health, Ageing and Retirement in Europe and from other sources. RESULTS: The estimates imply that drug launches during 1982-2015 reduced the probability of severe limitation in 2015 by 4.9 percentage points, from 21.8% to 16.9%; they reduced the probability of any limitation by 7.7 percentage points, from 61.1% to 53.4%; and they reduced the mean number of Activities of Daily Living limitations by about 29%. Drug launches also yielded a small increase in an index of quality of life and well-being. CONCLUSIONS: In general, the larger the number of drugs for a disease that were launched during 1982-2015 in a country, the lower the average disability in 2015 of patients with that disease in that country, controlling for the average level of disability in that country and from that disease, and the number of patients with the disease and their mean age.

The Impact of Pharmaceutical Innovation on Cancer Mortality in Belgium, 2004-2012.

Cancer mortality declined in Belgium during the period 2004-2012, but there was considerable variation in the rate of decline across cancer sites (breast, lung, etc.). I analyze the effect that pharmaceutical innovation had on cancer mortality in Belgium, by investigating whether the cancer sites that experienced more pharmaceutical innovation had larger subsequent declines in mortality, controlling for changes in cancer incidence. The measures of mortality analyzed - premature (before ages 75 and 65) mortality rates and mean age at death - are not subject to lead-time bias. Premature cancer mortality rates are significantly inversely related to the cumulative number of drugs registered 15-23 years earlier. Since mean utilization of drugs that have been marketed for less than 10 years is less than one fourth as great as mean utilization of drugs that have been marketed for at least a decade, it is not surprising that premature mortality is strongly inversely related only to the cumulative number of drugs that had been registered at least 10 years earlier. Drugs registered during the period 1987-1995 are estimated to have reduced the premature cancer mortality rate in 2012 by 20%. Mean age at death from cancer increased by 1.17 years between 2004 and 2012. The estimates indicate that drugs registered during the period 1987-1995 increased mean age at death from cancer in 2012 by 1.52 years. The estimates also suggest that drugs (chemical substances) within the same class (chemical subgroup) are not "therapeutically equivalent," i.e. they do not have essentially the same effect in the treatment of a disease or condition. The estimates imply that the drugs registered during 1987-1995 reduced the number of life-years lost to cancer at all ages in 2012 by 41,207. The estimated cost per-life-year gained in 2012 from cancer drugs registered in Belgium during the period 1987-1995 was €1311. This estimate is well below even the lowest estimates from other studies of the value of a life-year saved. The largest reductions in premature mortality occur 15-23 years after drugs are registered, when their utilization increases significantly. This suggests that, if Belgium is to obtain substantial additional reductions in premature cancer mortality in the future (15 or more years from now) at a modest cost, pharmaceutical innovation (registration of new drugs) is needed today.

The impact of pharmaceutical innovation on premature cancer mortality in Switzerland, 1995-2012.

The premature cancer mortality rate has been declining in Switzerland, but there has been considerable variation in the rate of decline across cancer sites (e.g., breast or digestive organs). I analyze the effect that pharmaceutical innovation had on premature cancer mortality in Switzerland during the period 1995-2012 by investigating whether the cancer sites that experienced more pharmaceutical innovation had larger declines in premature mortality, controlling for the number of people diagnosed and mean age at diagnosis. Premature cancer mortality before ages 75 and 65 is significantly inversely related to the cumulative number of drugs registered 5, 10, and 15 years earlier. The number of drugs registered during 1980-1997 explains 63 % of the variation across cancer sites in the 1995-2012 log change in the premature (before age 75) mortality rate. Controlling for the cumulative number of drugs, the cumulative number of chemical subgroups does not have a statistically significant effect on premature mortality. This suggests that drugs (chemical substances) within the same class (chemical subgroup) are not "therapeutically equivalent". Over 17,000 life-years before age 75 were gained in 2012 due to drugs registered during 1990-2007. The number of life-years before age 75 gained in 2012 from drugs registered during two earlier periods (1985-2002 and 1980-1997) were more than twice as great. Since mean utilization of new drugs is much lower than mean utilization of older drugs, more recent drug registrations may have a smaller effect on premature mortality than earlier drug registrations even if the average quality of newer drugs is higher. Estimates of the cost per life-year gained before ages 75 and 65 in 2012 from drugs registered during 1990-2007 are $21,228 and $28,673, respectively. These figures are below even the lowest estimates from the value-of-life literature of the value of a quality-adjusted life-year. The estimates indicate that the cost per life-year before age 75 gained from drugs registered during earlier periods (1985-2002 and 1980-1997) were considerably lower: $5299 and $3218, respectively. The largest reductions in premature mortality occur at least a decade after drugs are registered, when their utilization increases significantly. This suggests that if Switzerland is to obtain substantial additional reductions in premature cancer mortality in the future (a decade or more from now) at a modest cost, pharmaceutical innovation (registration of new drugs) is needed today.

The impact of recent chemotherapy innovation on the longevity of myeloma patients: US and international evidence.

The longevity of multiple myeloma patients increased sharply since the late 1990s. This increase coincided with the introduction of several important innovations in chemotherapy for myeloma. In this study, we aim to quantify the impact of recent chemotherapy innovation on the longevity of myeloma patients using both time-series US data and longitudinal data on 38 countries. We estimate that almost two-thirds (0.99 years) of the 1997-2005 increase in the life expectancy of American myeloma patients was due to an increase in the number of chemotherapy regimens now preferred by specialists. Based on a back-of-the-envelope calculation, this means that the cost per US life-year gained from post-1997 chemotherapy innovation is unlikely to have exceeded $46,000. We also investigate the impact of chemotherapy innovation on the myeloma mortality rate using longitudinal country-level data on 38 countries during the period 2002-2012. Countries that had larger increases in the number of chemotherapy regimens now preferred by specialists had larger subsequent declines in myeloma mortality rates, controlling for myeloma incidence. The (marginal) effect on the mortality rate of one additional preferred chemotherapy regimen is similar in other countries to its effect in the US. Non-US prices of two of the three new drugs were lower than US prices, so recent myeloma chemotherapy innovation may have been more cost-effective in other countries than it was in the US. Recent chemotherapy innovation has had a significant positive impact on the longevity of myeloma patients in the countries in which the drugs have been available.

The impact of pharmaceutical innovation on premature mortality, cancer mortality, and hospitalization in Slovenia, 1997-2010.

BACKGROUND: In Slovenia during the period 2000-2010, the number of years of potential life lost before the age of 70 years per 100,000 population under 70 years of age declined 25 %. OBJECTIVE: The aim of this study was to test the hypothesis that pharmaceutical innovation played a key role in reducing premature mortality from all diseases in Slovenia, and to examine the effects of pharmaceutical innovation on the age-standardized number of cancer deaths and on hospitalization from all diseases. Estimates and other data were used to calculate the incremental cost effectiveness of pharmaceutical innovation in Slovenia. METHOD: Longitudinal disease-level data was analyzed to determine whether diseases for which there was greater pharmaceutical innovation-a larger increase in the number of new chemical entities (NCEs) previously launched-had larger declines in premature mortality, the age-standardized number of cancer deaths, and the number of hospital discharges. My methodology controls for the effects of macroeconomic trends and overall changes in the healthcare system. RESULTS: Premature mortality from a disease is inversely related to the number of NCEs launched more than 5 years earlier. On average, the introduction of an additional NCE for a disease reduced premature mortality from the disease by 2.4 % 7 years later. The age-standardized number of cancer deaths is inversely related to the number of NCEs launched 1-6 years earlier, conditional on the age-standardized number of new cancer cases diagnosed 0-2 years earlier. On average, the launch of an NCE reduced the number of hospital discharges 1 year later by approximately 1.5 %. CONCLUSIONS: The estimates imply that approximately two-thirds of the 2000-2010 decline in premature mortality was due to pharmaceutical innovation. If no NCEs had been launched in Slovenia during 1992-2003, the age-standardized number of cancer deaths in 2008 would have been 12.2 % higher. The NCEs launched in Slovenia during 2003-2009 are estimated to have reduced the number of hospital discharges in 2010 by 7 %. If we assume that pharmaceutical expenditure was the only type of expenditure affected by pharmaceutical innovation, the cost per life-year saved was 3,953, which is well below even the lowest estimates of the value of a life-year saved. Moreover, 85 % of the increase in drug expenditure may have been offset by a reduction in hospital expenditure; therefore. the cost per life-year saved may have been only €611.

The impact of pharmaceutical innovation on premature cancer mortality in Canada, 2000-2011.

The premature cancer mortality rate has been declining in Canada, but there has been considerable variation in the rate of decline across cancer sites. I analyze the effect that pharmaceutical innovation had on premature cancer mortality in Canada during the period 2000-2011, by investigating whether the cancer sites that experienced more pharmaceutical innovation had larger declines in the premature mortality rate, controlling for changes in the incidence rate. Premature mortality before age 75 is significantly inversely related to the cumulative number of drugs registered at least 10 years earlier. Since mean utilization of drugs that have been marketed for less than 10 years is only one-sixth as great as mean utilization of drugs that have been marketed for at least a decade, it is not surprising that premature mortality is strongly inversely related only to the cumulative number of drugs that had been registered at least ten years earlier. Premature mortality before age 65 and 55 is also strongly inversely related to the cumulative number of drugs that had been registered at least ten years earlier. None of the estimates of the effect of incidence on mortality are statistically significant. Controlling for the cumulative number of drugs, the cumulative number of chemical subgroups does not have a statistically significant effect on premature mortality. This suggests that drugs (chemical substances) within the same class (chemical subgroup) are not therapeutically equivalent. During the period 2000-2011, the premature (before age 75) cancer mortality rate declined by about 9 %. The estimates imply that, in the absence of pharmaceutical innovation during the period 1985-1996, the premature cancer mortality rate would have increased about 12 % during the period 2000-2011. A substantial decline in the "competing risk" of death from cardiovascular disease could account for this. The estimates imply that pharmaceutical innovation during the period 1985-1996 reduced the number of years of potential life lost to cancer before age 75 in 2011 by 105,366. The cost per life-year before age 75 gained from previous pharmaceutical innovation is estimated to have been 2730 USD. Most of the previously-registered drugs were off-patent by 2011, but evidence suggests that, even if these drugs had been sold at branded rather than generic prices, the cost per life-year gained would have been below 11,000 USD, a figure well below even the lowest estimates of the value of a life-year gained. The largest reductions in premature mortality occur at least a decade after drugs are registered, when their utilization increases significantly. This suggests that, if Canada is to obtain substantial additional reductions in premature cancer mortality in the future (a decade or more from now) at a modest cost, pharmaceutical innovation (registration of new drugs) is needed today.