The Effect of New Drugs on Longevity

Life expectancy around the world has increased dramatically over the past fifty years, from an average of 46.5 years for a child born in 1950-1955 to an average of 65.0 years for a child born in 1995-2000. The gap in life expectancy between rich and poor countries has been halved, from 25 to 12 years. Over the same period, health care spending has risen substantially. However, it has historically been difficult to quantify the relationship between health care spending and longevity improvements. In fact, many health researchers have hypothesized that these longevity increases are primarily due to other factors such as changes in income, education, lifestyle, and the environment.

In The Impact of New Drug Launches on Longevity: Evidence from Longitudinal, Disease-Level Data from 52 Countries, 1982-2001 (NBER Working Paper 9754), Frank Lichtenberg assesses the contribution of one indicator of changes in health care--the introduction of new drugs--to longevity improvements around the world over the past twenty years. New drug launches are of particular interest because they account for a substantial fraction of medical innovations.

Using data from the IMS Health Drug Launches database and the World Health Organization Mortality database, the author constructs a data set with the number of new drugs launched since 1982 and the fraction of deaths occurring after age 65 for each major disease category, country, and year. By having data at the disease-country-year level, the author is able to account for the effect of unobservable factors such as environmental quality on longevity (as long as these factors have the same effect on all diseases in a given country and year, or in all countries for a given disease and year, or in all years for a given disease and country).

The author first explores the effect of launches of new chemical entities (NCEs)--drugs whose key ingredient has not previously been available in the country. He finds that increases in the stock of NCEs available to treat illnesses in a particular disease category are associated with increases in the fraction of deaths in that disease category that occur after age 65. When the stock of drugs is measured with a lag of 3-6 years, the effect is more than twice as large, suggesting that it may take several years for a new drug to have its full impact on survival rates, due to the gradual diffusion of new drugs to consumers.

The author then incorporates the number of non-NCE launches since 1982 into his model. He finds that, conditional on the number of NCE launches, an increase in the number of non-NCE launches has no effect on the fraction of deaths occurring after age 65.

The author uses these results to draw several important conclusions about new drug launches. First, he finds that differences in the prevalence of NCE launches can explain only a small fraction of the differences in life expectancy across countries in his sample. For example, only 0.5 years of the 5.7-year gap in life expectancy between Italy and Malaysia, the countries with the highest and lowest number of launches, can be attributed to differences in NCE launches over the period. However, his sample does not include African countries, where the number of NCE launches may be much lower than it is in Malyasia.

By contrast, he estimates that NCE launches can explain a significant fraction of the increase in longevity over time. He credits NCE launches with increasing life expectancy by 0.8 years over the 1986-2000 period - almost three weeks per year - for the 52 sample countries as a whole, or 40% of the total increase in life expectancy over the period. This suggests that launch delays can reduce longevity.

Finally, the author uses his results to calculate an upper-bound estimate of the cost per life-year gained from the launch of NCEs--$4500--which is far lower than most estimates of the value of a life-year. Taken together, these findings suggest that new drug launches can yield substantial longevity gains and that spending on new drugs may be a cost-effective way to achieve such gains.

This research was supported by the following companies: Aventis, Johnson & Johnson, Novartis, Pfizer, and Pharmacia. It was summarized by Courtney Coile.