Download Nursing home residence rates, by single year of age (age

Biomedical innovation,
longevity, and quality of life
Frank R. Lichtenberg
Columbia University and
National Bureau of Economic Research
[email protected]
• Health is improving
– Longevity
– “Quality of life”/functional status
• Biomedical innovation is responsible for a
significant part of improvements in health
2
Life expectancy at birth, world,
1950-2000
70
65
60
56.1
55
50
58.0
59.8
61.4
63.0
63.9
65.0
52.4
49.6
46.5
45
40
1950- 1955- 1960- 1965- 1970- 1975- 1980- 1985- 1990- 19951955 1960 1965 1970 1975 1980 1985 1990 1995 2000
3
Life expectancy at birth, by region
80
75
70
65
60
55
50
45
40
35
More developed regions
Less developed regions
1950- 1955- 1960- 1965- 1970- 1975- 1980- 1985- 1990- 19951955 1960 1965 1970 1975 1980 1985 1990 1995 2000
Unlike GDP, longevity is converging
4
Nursing home residents 65 years and over
per 1,000 population, age adjusted, 1973-1999
60
58
56
58.5
54
52
54.0
50
48
46
44
45.9
45.3
43.3
42
40
1973
1978
1983
1988
1993
1998
5
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)
6
Cost of breast cancer treatment
Drug
Anastrozole
Letrozole
Methyltestosterone
Methyltestosterone
FDA
Cost of
Appr
treatm
oval
ent per
year
month
1995
1997
1971
1971
$227.23
(Breast Cancer; Arimidex; 1 mg; 1
tablet/day; 30 day supply)
$232.96
(Breast Cancer; Femara; 2.5 mg;
1 tablet/day; 30 day supply)
$205.99
(Metastatic Breast Cancer
(female); Android; 25 mg; 2
tablets/day; 30 day supply)
$6.18
(Metastatic Breast Cancer
(female); Generic Tablets; 25
mg; 2 tablets/day; 30 day
supply)
7
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
8
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.”
9
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
10
Mean vintage of Medicaid Rx's, by
year
1984
1982.6
1981.8
1982
1980.8
1979.9
1980
1978.5
1978
1976
1977.2
1976.0
1974
1972
1997
1998
1999
2000
2001
2002
2003
11
% of U.S. prescriptions that contained
ingredients approved after 1985
50%
45%
45%
40%
41%
32%
35%
30%
25%
46%
35%
27%
23%
20%
15%
10%
5%
0%
1996
1997
1998
1999
2000
2001
2002
12
Mean vintage of 2002 Medicaid
Rx’s, by state
1985
1984
1984.0
1983.1
1983
1982.7
1982.3
1982.2
1982
1981.5
1981.5
1981.2
1981.2
1981.0
1981
1980.7
1980.0
1980
1979
1978
NJ
NY
FL
MA
CA
CO
SC
HI
UT
OR
WA
IA
13
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
14
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
15
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Survival function 1/1/1993
Survival function 1/1/2000
54%
12
11
10
9
8
7
6
5
4
3
2
3%
1
0
Prob. of survival
HIV/AIDS Survival functions: 1993 vs. 2000
Years since diagnosis
16
No. of HIV/AIDS Rx's
per person with HIV/AIDS
12
10
8
6
4
2
0
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
17
Change in average HIV/AIDS drug utilization
and % change in mortality rate
3.5
-40%
Change in average no. of HIV Rx's
-35%
% change in mortality rate
-30%
2.5
2
-20%
1.5
-15%
1
-10%
-5%
0.5
0%
-0.5
-1
19
99
20
00
19
98
19
97
19
95
19
96
19
94
19
92
19
93
19
91
19
89
19
90
19
88
19
87
19
85
19
86
19
84
19
82
19
83
0
19
81
Change in avge. drug util.
-25%
5%
% change in mortality rate (inverted scale)
3
10%
15%
18
Drug utilization and hospital
utilization
4
-0.3
3.5
change in prescriptions per person
-0.25
change in discharges per person
3
-0.2
2.5
2
-0.15
1.5
-0.1
1
-0.05
0.5
0
1994
1995
1996
1997
1998
1999
2000
2001
0
-0.5
0.05
-1
-1.5
0.1
19
• 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.
20
The impact of new drug
launches on longevity:
evidence from longitudinal, diseaselevel data from 52 countries, 1982-2001
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
22
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
23
Countries with most and fewest
drug launches
450
400
350
300
250
200
150
422 422 414
373 373
174 171
153 142
100
50
0
122
ITALY
JAPAN
USA
ARGENTINA
UK
PAKISTAN
SINGAPORE
SAUDI ARABIA
EGYPT
MALAYSIA
Number of NCEs launched
24
Example: tenecteplase
Launch date
6/00
3/01
5/01
9/01
10/01
10/01
11/01
Country
USA
Finland
UK
Norway
Canada
South Africa
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.
25
Drug launch probability profiles:
U.S. vs. Canada
60%
50%
50%
46%
40%
39%
37%
52%
54%
55%
40%
40%
41%
31%
30%
20%
CANADA
USA
20%
10%
0%
0%
0
2
4
6
8
10
12
Years since initial world launch
26
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
27
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 19862000 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.
28
2.5
Contribution of NCE launches to increase in
average
life expectancy of the population since 1986
increase in longevity due to NCE launches
2.0
1.8
total increase in longevity
1.4
1.5
0.9
1.0
0.5
0.1
0.2
1.1
1.5
2.0
1.7
1.2
0.8
0.7
0.7 0.8
0.7
0.6 0.7
0.6
0.6
0.6
0.5
0.5
0.4
0.4
0.0
1986
1988
1990
1992
1994
1996
1998
2000
29
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
30
gained from the launch of NCEs
The effect of drug vintage on
survival rates:
individual-level evidence from
Puerto Rico’s Medicaid program
Data
• All medical and pharmacy claims of ASES
beneficiaries during the period January 1June 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.
32
Low utilization of
post-1980 drugs in ASES
70%
63%
62%
60%
60%
49%
50%
48%
40%
30%
28%
30%
26%
post70
post80
post90
20%
10%
8%
0%
ASES
U.S.--total
U.S.--Medicaid
33
DIEDi = b1970 POST1970i + b1980 POST1980i + b1990 POST1990i + g Zi + ei
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
ei = a disturbance
34
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)
35
3-year mortality rate
Mortality rate declines as
drug vintage increases
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
4.4%
3.6%
3.0%
2.5%
pre 1970
1970s
1980s
1990s
Drug vintage
36
Analysis by disease group
25.0%
20.1%
pre 1970
1970s
1980s
1990s
20.0%
15.0%
16.7%
14.0%
13.1%
10.9%
10.0%
7.8%
7.6%
7.0%
5.6%
5.0%
6.0%
5.1%
4.0%
0.0%
Circulatory system
Endocrine/metabolic
Neoplasms
37
The effect of using newer drugs on admissions
of elderly Americans to hospitals and nursing
homes: state-level evidence from 1993-2003
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 19972003, 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.
39
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 40
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
41
Hospital admissions per thousand people
600
500
400
300
200
100
0
539
292
82
106
0-44
45-64
65-84
85+
Age
42
ADMa
Old-drug profile
New-drug profile
LEold
LEnew
43
Availability of new drugs and
Americans’ ability to work
% of People Unable
to Work, by Age
15.2%
16%
14%
12%
10%
7.9%
8%
6%
4%
4.6%
2.9%
2%
0%
25-34 years
35-44 years
45-54 years
Illness-induced early retirement of
older workers: human-capital losses
55-64 years
45
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 workingage population.
• Attempt to determine whether the value of
the increase in goods and services
resulting from new drugs exceeds the cost
of the drugs.
46
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
47
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
48
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
49
20 most frequent conditions
Condition
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%
50
Probability of being unable to work
in 1996
due to 47 major chronic conditions
6.0%
5.2%
5.0%
4.0%
4.0%
3.0%
2.0%
1.0%
0.0%
Actual
If no drugs approved after 1982
51
Benefits vs. costs of new drugs
$500
$450
$400
$350
$300
$250
$200
$150
$100
$50
$0
$451
$51
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
52
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
53
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
54
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 diseaselevel 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.
55