Yes, New Drugs Save Lives

By Frank R. Lichtenberg
Wednesday, July 11, 2007

A typical baby born in this country in 1900 was expected to live to about age 45. Today, life expectancy at birth is about 78 and climbing. Americans are living longer and healthier lives than ever before. But we have never been more concerned about the risks and costs associated with new prescription drugs and medical devices.

Rising health-care costs and safety problems with FDA-approved products such as the painkiller Vioxx, drug-coated stents and implanted defibrillators have led some to worry that recent medical innovations may be doing us more harm than good.

The debate over the relative speed (and caution) with which new medical products should be approved has crystallized in Congress as it crafts legislation reauthorizing the Prescription Drug User Fee Act. Since 1992 the act has been a critical funding source for the Food and Drug Administration. Lawmakers should be careful to balance safety and cost concerns, and additional regulatory burdens for product developers, with benefits to patients -- specifically, the measurable impact that new medical innovations have on Americans' longevity and quality of life.

How have medical innovations affected American health? In a study the Manhattan Institute is releasing today -- "Why Has Life Expectancy Increased More in Some States Than in Others?" -- I explain that incremental medical innovations, particularly the use of newer drugs, have played a major role in increasing American longevity in recent years.

I began by looking at the interstate variation in life expectancy. Most Americans would probably be surprised to discover that, on average, residents of Hawaii (81.3 years) and Minnesota (80.3 years) lived six or seven years longer than residents of Mississippi and Louisiana (74.2 years).

And while U.S. life expectancy increased by 2.33 years from 1991 to 2004, some jurisdictions -- the District of Columbia (5.7 years), New York (4.3 years), California (3.4 years) and New Jersey (3.3 years) -- led the way, while others, such as Oklahoma (0.3 years), Tennessee (0.8 years) and Utah (0.9 years), trailed the national average by significant margins. (Between 1991 and 2004, life expectancy in Maryland and Virginia increased by 2.5 and 2.6 years, respectively.)

To find out why this longevity "increase gap" exists, I examined several factors that researchers generally agree affect life expectancy, including medical innovation, obesity rates, smoking and HIV-AIDS infection rates. While each of these factors had an impact on longevity, the most important factor was medical innovation. In particular, I found that longevity increased the most in those states where access to newer drugs -- measured by their mean "vintage," or FDA approval year -- in Medicaid and Medicare programs has increased the most.

According to my econometric model, about two-thirds (63 percent) of the potential increase in longevity during this period -- the increase that would have occurred if obesity, income and other factors had not changed -- can be attributed to the use of newer drugs. In fact, for every year increase in average drug vintage there was an almost two-month gain in life expectancy.

Increasing access to newer drugs was not associated with above-average annual spending on health care; and the use of newer medicines seems to have increased labor productivity (output per employee) by about 1 percent per year, perhaps because of reduced absenteeism from chronic ailments. Overall, my findings contradicted the common assumption that advances in medical technology automatically result in increased health-care expenditures.

Congressional debate over the Prescription Drug User Fee Act is a microcosm of the national debate over the appropriate balance between safety and rapid access to new and sometimes very expensive medical innovations. While this debate is complex, my research indicates that the best way to achieve sustained improvements in health, longevity and productivity is by continuing to support policies that encourage medical innovation and the new medical goods and services it produces.

The writer is a professor at the Columbia UniversityGraduate School of Businessand a research associate of theNational Bureau of Economic Research. Some of his previous research has been funded by unrestricted grants from the pharmaceutical industry.

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