Increased Life Expectancy Thanks to "Big Pharma"?
Wonder why Americans are living longer? Columbia University economist Frank Lichtenberg has an interesting Washington Post op/ed which blames the increase on medical innovation. He compares longevity and the use of modern treatments between states. The result is that states in which people use up-to-date treatments had bigger increases in their residents' average life expectancy. To wit:
To find out why this longevity "increase gap" exists, I examined several factors that researchers generally agree affect life expectancy, including medical innovation, obesity rates, smoking and HIV-AIDS infection rates. While each of these factors had an impact on longevity, the most important factor was medical innovation. In particular, I found that longevity increased the most in those states where access to newer drugs—measured by their mean "vintage," or FDA approval year—in Medicaid and Medicare programs has increased the most.
According to my econometric model, about two-thirds (63 percent) of the potential increase in longevity during this period—the increase that would have occurred if obesity, income and other factors had not changed—can be attributed to the use of newer drugs. In fact, for every year increase in average drug vintage there was an almost two-month gain in life expectancy.
Increasing access to newer drugs was not associated with above-average annual spending on health care; and the use of newer medicines seems to have increased labor productivity (output per employee) by about 1 percent per year, perhaps because of reduced absenteeism from chronic ailments. Overall, my findings contradicted the common assumption that advances in medical technology automatically result in increased health-care expenditures.
Disclosure: As faithful H&R readers know, I own a few shares in a bunch of biotech companies. Why? Because I believe that the desire of people to live longer healthier lives will make them profits which will be reflected in their higher stock prices. Of course, some of the companies I've put my few shekels in will go bust. Finally, in my disclosure for yesterday's column, I didn't know if I owned in shares in companies that make antidepressants. I got around to asking my stockbroker (who is also my wife) last night. She says that I own 50 shares of Pfizer which makes Zoloft. So far I have lost money on that stock.