There is strong evidence that the benefits from new pharmaceuticals in terms of longer life and better health in old age far exceed the costs, and drug innovation also saves money by reducing the demand for other forms of medical care, says Frank Lichtenberg.
Using U.S. national data, the author finds:
It has long been suggested that, because generic drugs tend to be less expensive than branded drugs, allowing people to use only generic drugs might reduce health expenditures. But, because drugs out of patent and thus available generically tend to be much older than branded drugs, Lichtenberg concludes that using generics would actually increase total treatment costs as well as lead to less favourable medical outcomes.
Lichtenberg suggests that policy makers consider the full range of effects not just the costs of newer drugs.
Source: Frank Lichtenberg, The Value of New Drug, Milken Institute Review, Fourth Quarter 2003.
For Milken text (subscription required)
http://www.milkeninstitute.org/publications/review/2003_12/16_25mr20.pdf
For more on Health Care and Drugs (Therapies/and or New Technologies)
http://www.ncpa.org/iss/hea/
FMF Policy Bulletin/ 3 February 2004
