Although the high cost of pharmaceuticals is often in the news, these costs are offset by improved health benefits. However, it may not be clear the extent to which new pharmaceutical products lead to improved health at the national level.
A paper by Lichtenberg (2018) aims to examine this question looking at the introduction of new chemical entities (NCE)–or new drugs in layman’s terms–on patient health outcomes. The primary outcome of interest is years of potential life lost (YPLL) before a specified age. YPLL is calculated by summing up deaths occurring at each age and multiplying this by the number of remaining years to live up to a selected age limit. While clearly the threshold value selected for YPLL will affect the calculation, comparing YPLL outcomes across states of the world can be informative.
The model to be estimated is:
ln(YPLL75ict) = βk (CUM_NCEic,t-k) + αic + δit + πct + εict
Where the outcome of interest is premature mortality prior to age 75. This variable is identified in the WHO’s Global Health Estimates 2015. The key independent variable is the number of post-1992 NCEs to treat disease i that had been launched in country c by the end of year t-k, and the remaining terms are fixed disease (i), country (c), and time (t) fixed effects terms. The drug launch information comes from the IMS Health New Product Focus database (a.k.a. the QuintilesIMS Ark New Product Intelligence).
Using these data and this triple-differences analytic framework, the author finds:
An 8-year increase in the number of post-1992 NCEs ever launched is estimated to have reduced the number of years of potential life lost before age 75 (YPLL75) in 2015 by 9.5 %. This is approximately half of the 18.9 % reduction in YPLL75, and about one-third of the 29.7 % reduction in the premature mortality rate. In the absence of 8 previous years of NCE launches, 2.80 million additional YPLL before age 75 would have been lost in 2015.
- Lichtenberg, Frank R. “The Impact of New Drug Launches on Longevity Growth in Nine Middle Eastern and African Countries, 2007–2015.” Review of Middle East Economics and Finance (2018).