Newer Drugs = Less Disability

The Manhattan Institute has just released a new study by Columbia University economist Frank Lichtenberg that finds that using newer (and more expensive) drugs reduces disability rates. As the study reports:

…the report studies patterns in the dispensing of prescription drugs in forty-nine of the fifty states from 1995 to 2004, using data on Medicaid prescriptions in thirty therapeutic groups, which account for virtually all Medicaid medicines dispensed. The data includes the name of the drug and the year in which the U.S. Food and Drug Administration approved its active ingredient—what we call the drug's "vintage." For instance, Zocor's active ingredient, simvastatin, was approved in 1991, making 1991 the drug's vintage.,,

he study found that states in which the difference between average vintage of Medicaid prescriptions in 1995 and average vintage in 2004 was the largest—these being states in which pharmaceutical innovations were adopted quickly—had the smallest increases in disability rates…

By our estimates, if the average vintage of drugs prescribed since 1995 and paid for by Medicaid had not become more recent, the rate of increase at which working-age people were classified as disabled would have been 30 percent higher than it actually was, resulting in 418,000 additional people receiving disability payments in 2004. Social Security benefits paid to this population would have been an additional $4.5 billion.

Consequently, it is reasonable to conclude that access to pharmaceutical innovations has been responsible for keeping large numbers of U.S. residents off disability rolls who otherwise would have joined them.

Whole Manhattan Institute report here. My article on Big Pharma—"Goddamn the Pusher Man"—here.