biomedical innovation, longevity, and quality of life
TRANSCRIPT
Biomedical innovation, longevity, and quality of life
Frank R. Lichtenberg
Columbia University and National Bureau of Economic Research
2
• Health is improving– Longevity– “Quality of life”/functional status
• Biomedical innovation is responsible for a significant part of improvements in health
3
Life expectancy at birth, world, 1950-2000
46.549.6
52.4
56.158.0
59.861.4
63.0 63.9 65.0
40
45
50
55
60
65
70
1950-1955
1955-1960
1960-1965
1965-1970
1970-1975
1975-1980
1980-1985
1985-1990
1990-1995
1995-2000
4
Life expectancy at birth, by region
35
40
4550
55
60
6570
75
80
1950-1955
1955-1960
1960-1965
1965-1970
1970-1975
1975-1980
1980-1985
1985-1990
1990-1995
1995-2000
More developed regions
Less developed regions
Unlike GDP, longevity is converging
5
Nursing home residents 65 years and over per 1,000 population, age adjusted, 1973-1999
58.5
54.0
45.945.3
43.3
40
42
44
46
48
50
52
54
56
58
60
1973 1978 1983 1988 1993 1998
6
New drugs cost more, but are they worth more?
• New drugs tend to cost more—sometimes a great deal more—than older drugs
• Much of the increase in per capita drug expenditure is due to the replacement of older (often generic) drugs by newer, more expensive branded drugs
• New drugs cost more, but are they worth more?
• There are two main ways in which they could be worth more
– They could result in better outcomes (longer life, higher quality of life, higher productivity)
– They could reduce utilization of other medical care (e.g. hospitals and nursing homes)
7
Cost of breast cancer treatment
Drug
FDA Approval year
Cost of treatment per month
Anastrozole 1995 $227.23 (Breast Cancer; Arimidex; 1 mg; 1
tablet/day; 30 day supply)
Letrozole 1997 $232.96 (Breast Cancer; Femara; 2.5 mg;
1 tablet/day; 30 day supply)
Methyltestosterone 1971 $205.99
(Metastatic Breast Cancer (female); Android; 25 mg; 2 tablets/day; 30 day supply)
Methyltestosterone 1971 $6.18
(Metastatic Breast Cancer (female); Generic Tablets; 25 mg; 2 tablets/day; 30 day supply)
8
Potential benefits of newer drugs
• Longer life• Improved quality of life/functional status • Reduced utilization of other medical services
– Hospitals– Nursing homes
• Increased productivity/ability to work – Lower probability of being out of labor force
(completely unable to work)– Fewer days of work missed by people with jobs
9
Role of new goods in economic growth
• Solow, Technical Progress, Capital Formation, and Economic Growth: “technological progress needs to be ‘embodied’ in newly produced…goods before there can be any effect on output.”
• Grossman and Helpman, Innovation and Growth in the Global Economy: “innovative goods are better than older products simply because they provide more ‘product services’ in relation to their cost of production.”
• Bresnahan and Gordon, The Economics of New Goods: “New goods are at the heart of economic progress”
• Bils: Measuring the Growth from Better and Better Goods, “Much of economic growth occurs through growth in quality as new models of consumer goods replace older, sometimes inferior, models.”
10
General research approach
• Compare the health outcomes or expenditure of individuals, or groups of individuals (where group is defined by region, disease, or both) using newer vs. older drugs, controlling for other factors
• Key explanatory variable is the mean vintage of drugs used by an individual or group
• The vintage of a drug is the year in which the drug’s active ingredient was first marketed
• Example: Anastrozole is a 1995-vintage drug
11
Mean vintage of Medicaid Rx's, by year
1976.0
1977.2
1978.5
1979.9
1980.8
1982.61981.8
1972
1974
1976
1978
1980
1982
1984
1997 1998 1999 2000 2001 2002 2003
12
% of U.S. prescriptions that contained ingredients approved after 1985
23%
27%
32%35%
41%45%
46%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1996 1997 1998 1999 2000 2001 2002
13
Mean vintage of 2002 Medicaid Rx’s, by state
1984.0
1983.11982.7
1982.3 1982.2
1981.5 1981.51981.2 1981.2
1981.01980.7
1980.0
1978
1979
1980
1981
1982
1983
1984
1985
NJ NY FL MA CA CO SC HI UT OR WA IA
14
Several types of evidence
• Individual level
• Aggregate level– By disease and year
– By region and year
– By disease, region, and year
• Each approach has advantages and disadvantages
15
Impact of new drugs on longevity
1. Aggregate evidence: HIV/AIDS patients in the U.S.
2. Aggregate evidence: Entire populations of 52 countries
3. Individual-level evidence: Puerto Rico Medicaid program
16
HIV/AIDS Survival functions: 1993 vs. 2000
3%
54%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
0 1 2 3 4 5 6 7 8 9 10 11 12
Years since diagnosis
Pro
b.
of
surv
ival
Survival function 1/1/1993
Survival function 1/1/2000
17
No. of HIV/AIDS Rx's per person with HIV/AIDS
0
2
4
6
8
10
12
1981 1983 1985 1987 1989 1991 1993 1995 1997 1999
Between 1995 and 1997, seven new molecules and two new drug classes for treating HIV were introduced
18
Change in average HIV/AIDS drug utilization and % change in mortality rate
-1
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Ch
ang
e in
avg
e. d
rug
uti
l.
-40%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
% c
han
ge
in m
ort
alit
y ra
te (
inve
rted
sca
le)
Change in average no. of HIV Rx's
% change in mortality rate
19
Drug utilization and hospital utilization
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
4
1994 1995 1996 1997 1998 1999 2000 2001
-0.3
-0.25
-0.2
-0.15
-0.1
-0.05
0
0.05
0.1
change in prescriptions per person
change in discharges per person
20
• Estimates of a mortality model imply that actual life expectancy in 2001 was 13.4 years higher than it would have been if the drug utilization rate had not increased from its 1993 level. About 60% of the total 22.6-year increase in life expectancy during 1993-2001 is attributable to the increase in drug utilization.
• Estimates of a model of hospital discharges imply that increased utilization of HIV drugs caused hospital utilization to decline by .25 to .29 discharges per person per year. About one-third of the total decline in hospital utilization during 1993-2001 is attributable to the increase in drug utilization; 56% of the increase in HIV drug expenditure appears to have been offset by a reduction in hospital expenditure.
The impact of new drug launches on longevity:
evidence from longitudinal, disease-level data from 52 countries, 1982-2001
22
Econometric approach
• Link two major databases:– World Health Organization data on the age
distribution of deaths, by country, disease, and year– IMS Health data on drug launches, by country,
disease (therapeutic class), and year
• Estimate relationship between cumulative number of drugs launched 3 years earlier and prob. of dying after age 65
• Include extensive controls for potentially confounding variables
23
IMS Health Drug Launches database
• Has tracked new product introductions worldwide since 1982
• In August 2001 the database contained over 165,000 records of individual product introductions between 1982 and 2001
• Allows measurement, for each country and therapeutic area, of the total number of ingredients launched, and the number of new chemical entities launched
24
Countries with most and fewest drug launches
422 422 414373 373
174 171 153 142122
0
50
100
150
200
250
300
350
400
450
Number of NCEs launched
ITALYJAPANUSAARGENTINAUKPAKISTANSINGAPORESAUDI ARABIAEGYPTMALAYSIA
25
Example: tenecteplaseLaunch date Country
6/00 USA
3/01 Finland
5/01 UK
9/01 Norway
10/01 Canada
10/01 South Africa
11/01 Ireland
Tenecteplase is used to dissolve blood clots that have formed in the blood vessels of the heart and seriously lessen the flow of blood in the heart. This medicine is used to improve survival after a heart attack.
26
Drug launch probability profiles: U.S. vs. Canada
0%
20%
31%37% 40% 40% 41%
0%
39%
46%50% 52% 54% 55%
0%
10%
20%
30%
40%
50%
60%
0 2 4 6 8 10 12
Years since initial world launch
CANADAUSA
27
Findings• Launches of New Chemical Entities (NCEs)
have a strong positive impact on the probability of survival
• Launches of (older) drugs that are not NCEs—many of which may already have been on the market—do not increase longevity
28
Contribution of NCE launches to longevity increase
• Between 1986 and 2000, average life expectancy of the entire population of sample countries increased by almost two (1.96) years.
• The estimates imply that NCE launches accounted for 0.79 years (40%) of the 1986-2000 increase in longevity.
• The average annual increase in life expectancy of the entire population resulting from NCE launches is .056 years, or 2.93 weeks.
29
Contribution of NCE launches to increase in average
life expectancy of the population since 1986
0.4 0.5 0.5 0.6 0.6 0.6 0.7 0.7 0.7 0.8
0.1
0.40.6
0.7 0.80.9
1.11.2
1.41.5
1.71.8
2.0
0.2
0.0
0.5
1.0
1.5
2.0
2.5
1986 1988 1990 1992 1994 1996 1998 2000
increase in longevity due to NCE launches
total increase in longevity
30
Cost per life-year gained from the launch of NCEs
• In 1997, average per capita pharmaceutical expenditure in OECD countries was about $250
• The average annual increase in life expectancy of the entire population resulting from NCE launches is .056 years
• Hence pharmaceutical expenditure per person per year divided by the increase in life-years per person per year attributable to NCE launches is about $4500
• This is far lower than most estimates of the value of a life-year
• Moreover, since the numerator includes expenditure on old drugs as well as on recently-launched NCEs, it probably grossly overstates the cost per life-year gained from the launch of NCEs
The effect of drug vintage on survival rates:
individual-level evidence from Puerto Rico’s Medicaid program
32
Data
• All medical and pharmacy claims of ASES beneficiaries during the period January 1-June 30, 2000– Almost 800,000 people; 540,000 had
pharmacy claims– About 12.2 million claims
• List of all Puerto Rican residents who died during the period 2000-2002.
33
Low utilization of post-1980 drugs in ASES
63%60% 62%
30%
49% 48%
8%
28%26%
0%
10%
20%
30%
40%
50%
60%
70%
ASES U.S.--total U.S.--Medicaid
post70
post80
post90
34
DIEDi = 1970 POST1970i +1980 POST1980i +1990 POST1990i + Zi + i
where:
DIEDi = 1 if individual i died during the period 2000-2002
= 0 otherwise
POST1970i = the fraction of individual i’s prescribed medicines whose active ingredients were approved by the FDA after 1970
POST1980i = the fraction of individual i’s prescribed medicines whose active ingredients were approved by the FDA after 1980
POST1990i = the fraction of individual i’s prescribed medicines whose active ingredients were approved by the FDA after 1990
Zi = a vector of covariates
i = a disturbance
35
Covariates
• Demographic information (age, sex, region)
• Person’s utilization of services (number of physician encounters, pharmacy claims, hospital admissions during Jan.-June 2000)
• Nature of person’s illnesses (diagnosis codes grouped into 15 broad disease groups)
36
Mortality rate declines as drug vintage increases
4.4%
3.6%
3.0%2.5%
0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%
pre 1970 1970s 1980s 1990s
Drug vintage
3-ye
ar m
ort
alit
y ra
te
37
Analysis by disease group
10.9%
7.6%
20.1%
7.8%
6.0%
16.7%
7.0%
5.1%
13.1%
5.6%
4.0%
14.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Circulatory system Endocrine/metabolic Neoplasms
pre 1970
1970s
1980s
1990s
The effect of using newer drugs on admissions of elderly Americans to hospitals and nursing homes: state-level evidence from 1993-2003
39
The effect of using newer drugs on admissions of elderly Americans to hospitals and nursing homes:
state-level evidence from 1993-2003
• Examine the effect of pharmaceutical innovation on admissions of elderly Americans to hospitals and nursing homes during 1997-2003, using longitudinal state-level data on 12 states.
• Hospital and nursing home admissions data derived from the State Inpatient Databases, which contain the universe of inpatient discharge abstracts in participating States
• State-level drug utilization information for outpatient drugs purchased by State Medicaid agencies.
– Very precise information about the vintage (FDA approval year) distribution of over 43,000 products utilized by 24 million people, by state and calendar quarter, from 1991 to the present.
– The extent of utilization of new drugs in the Medicaid program is strongly correlated with the extent of utilization of new drugs in general.
40
Other factors controlled for
• state and year fixed effects• per capita income• percent of state residents below the poverty line• percent of state residents with no public or private
health insurance• percent of state residents who completed high
school• percent of state residents who completed 4 years
of college• mean body mass index (BMI) of state residents
41
Findings• Mean vintage of Medicaid Rx’s increased by 6.2 years between 1997 and
2003– Mean vintage of 1997 Rx’s was 1976.0– Mean vintage of 2003 Rx’s was 1982.6
• States that had larger increases in drug vintage had smaller increases in the number of hospital and nursing-home admissions per elderly person.
• Use of newer drugs (increase in mean vintage) increased drug expenditure per person by $284-$778 in 2003
• Use of newer drugs reduced the number of hospital admissions by 6.1 per hundred people in 2003; this was worth $785 per person
• Use of newer drugs reduced the number of nursing home admissions by 2.7 per hundred people in 2003; this was worth $1166 per person
• Although use of newer drugs increases life expectancy, it reduces lifetime admissions to hospitals and nursing homes
42
Hospital admissions per thousand people
82 106
292
539
0100200300400500600
0-44 45-64 65-84 85+
Age
43
ADMa
LEold LEnew
Old-drug profile
New-drug profile
Availability of new drugs andAmericans’ ability to work
45
% of People Unable to Work, by Age
2.9%
4.6%
7.9%
15.2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
25-34 years 35-44 years 45-54 years 55-64 years
Illness-induced early retirement of older workers: human-capital losses
46
Research objectives• Investigate the extent to which the introduction
of new drugs has increased society’s ability to produce goods and services, by increasing the number of hours worked per member of the working-age population.
• Attempt to determine whether the value of the increase in goods and services resulting from new drugs exceeds the cost of the drugs.
47
Previous evidence re. the impact of new drugs on ability to work
Numerous case studies of specific drugs• Terbutaline (approved by the FDA in 1974)
for asthma • Glipizide (1984) for diabetes• Sumatriptan and rizatriptan (1992 and
1998, respectively) for migraines. However, it is difficult to estimate from case
studies the average or aggregate effect of new drugs on ability to work
48
National Health Interview Survey
• Principal source of information on the health of the population of the United States
• Survey remained the same during the period 1982-1996
• During that period, it collected information from 1,017,164 working-age Americans on 133 chronic conditions and impairments
49
Condition-specific data
• NHIS collected information about:– whether each person was unable to work,
mainly due to one of the chronic conditions, and
– the number of work-days missed in the two weeks preceding the interview due to each chronic condition (for currently employed persons)
• Each respondent to the survey was asked about 1/6 of the 133 conditions
50
20 most frequent conditionsCondition N % cum N cum % % unable to work
Sinusitis 27,457 12.6 27,457 12.6 0.1%
Arthritis 22,668 10.4 50,125 22.9 6.8%
Hypertension 22,428 10.3 72,553 33.2 3.7%
Allergic Rhinitis 18,029 8.2 90,582 41.4 0.1%
Gastrointestinal Disorders - Other 14,264 6.5 104,846 47.9 1.0%
Skin Disorders - Other 11,148 5.1 115,994 53.0 0.2%
Migraines 8,726 4.0 124,720 57.0 0.8%
Bronchitis 7,884 3.6 132,604 60.6 0.8%
Headaches 7,315 3.3 139,919 64.0 0.5%
Cardiovascular Disease 7,152 3.3 147,071 67.3 10.4%
Asthma 6,820 3.1 153,891 70.4 3.9%
Dermatitis 6,381 2.9 160,272 73.3 0.2%
Peripheral Vascular Disease 6,200 2.8 166,472 76.1 0.7%
Diabetes 5,269 2.4 171,741 78.5 13.3%
Bursitis/Tendonitis 4,024 1.8 175,765 80.4 1.3%
Ulcers 3,855 1.8 179,620 82.1 2.7%
Acne 3,174 1.5 182,794 83.6 0.0%
Thyroid Disorders 3,005 1.4 185,799 85.0 1.7%
Anemia 2,873 1.3 188,672 86.3 1.4%
Kidney Disorders 2,704 1.2 191,376 87.5 3.5%
51
Probability of being unable to work in 1996
due to 47 major chronic conditions
4.0%
5.2%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Actual If no drugs approved after 1982
52
Benefits vs. costs of new drugs
$451
$51
$0$50
$100$150$200$250$300$350$400$450$500
Benefit Cost
• Benefit: increase in expected earnings due to increased probability of being able to work
• Cost: average expenditure on new drugs for these conditions
53
Biomedical innovation, longevity, and quality of life
• Health is improving– Longevity– “Quality of life”/functional status
• Biomedical innovation is responsible for a significant part of improvements in health
54
Summary
• Public health depends on the quality as well as the quantity of pharmaceuticals consumed
• There is an easily measured characteristic of drugs that is strongly correlated with quality: vintage
– The vintage of a drug is the year in which the drug’s active ingredient was first marketed
• Mean vintage (or the % of new drugs) varies across individuals, regions, and diseases
• Both micro and macro evidence indicate that drug vintage has important effects on mortality, hospital and nursing home utilization, and other health outcomes
55
Some of my published articles• “Pharmaceutical Knowledge-Capital Accumulation and Longevity,” in Measuring
Capital in the New Economy, ed. by Carol Corrado, John Haltiwanger, and Dan Sichel, pp. 237-269 (University of Chicago Press, 2005).
• "Availability of new drugs and Americans' ability to work," Journal of Occupational and Environmental Medicine 47 (4), April 2005, 373-380.
• “The Effect of Access Restrictions on the Vintage of Drugs Used by Medicaid Enrollees,” American Journal of Managed Care 11, Special Issue, 2005, SP7-SP13.
• "The impact of new drug launches on longevity: evidence from longitudinal disease-level data from 52 countries, 1982-2001," International Journal of Health Care Finance and Economics 5, 2005, pp. 47-73.
• “Sources of U.S. Longevity Increase, 1960-2001,” Quarterly Review of Economics and Finance 44(3), pp. 369-389 (July 2004).
• “The Effect of New Drugs on HIV Mortality in the U.S., 1987-1998,” Economics and Human Biology 1 (2003) 259-266.
• “Pharmaceutical Innovation, Mortality Reduction, and Economic Growth,” in Measuring the Gains from Medical Research: An Economic Approach, ed. by Kevin M. Murphy and Robert H. Topel (Chicago: University of Chicago Press, 2003), pp. 74-109.
• “Are the Benefits of Newer Drugs Worth Their Cost? Evidence from the 1996 MEPS,” Health Affairs 20(5), September/October 2001, 241-51.