Abstract

http://ssrn.com/abstract=315993
 
 

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Benefits and Costs of Newer Drugs: An Update


Frank R. Lichtenberg


Columbia Business School - Finance and Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); National Bureau of Economic Research (NBER)

June 2002

NBER Working Paper No. w8996

Abstract:     
We update and extend our previous study of the effect of drug age -- years since FDA approval -- on total medical expenditure, in several respects. The estimates indicate that, in the entire population, a reduction in the age of drugs utilized reduces non-drug expenditure 7.2 times as much as it increases drug expenditure. In the Medicare population, a reduction in the age of drugs utilized reduces non-drug expenditure by all payers 8.3 times as much as it increases drug expenditure; it reduces Medicare non-drug expenditure 6.0 times as much as it increases drug expenditure. About two-thirds of the non-drug Medicare cost reduction is due to reduced hospital costs. The remaining third is approximately evenly divided between reduced Medicare home health care cost and reduced Medicare office-visit cost. We also found that the mean age of drugs used by Medicare enrollees with private Rx insurance is about 9% lower than the mean age of drugs used by Medicare enrollees without either private or public Rx insurance.

Number of Pages in PDF File: 13

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Date posted: June 13, 2002  

Suggested Citation

Lichtenberg, Frank R., Benefits and Costs of Newer Drugs: An Update (June 2002). NBER Working Paper No. w8996. Available at SSRN: http://ssrn.com/abstract=315993

Contact Information

Frank R. Lichtenberg (Contact Author)
Columbia Business School - Finance and Economics ( email )
3022 Broadway
504 Uris Hall, Dept. of Finance & Economics
New York, NY 10027
United States
212-854-4408 (Phone)
212-316-9219 (Fax)
HOME PAGE: http://www3.gsb.columbia.edu/whoswho/full.cfm?id=88

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
Poschinger Str. 5
Munich, DE-81679
Germany
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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