Issue Area - Value of Pharmaceuticals
“The lifespan for Americans rose from 77 years in 2000
to 77.2 in 2001, continuing a long-term trend of Americans living longer,
the federal Centers for Disease Control and Prevention reported...Over
a six-year period, deaths from HIV dropped nearly 70 percent, largely
because of the introduction of new, more powerful drug combinations.”
--From “Life Expectancy in U.S. Reaches a Record High,”
The Washington Post, March 15, 2003
Are the Benefits of Newer Drugs Worth Their Cost? Evidence From the 1996 MEPS, by Frank R. Lichtenberg, Health Affairs, Vol. 20, No.5,
September/October 2001
Critics of pharmaceutical spending point to the increase in the pharmaceutical “line item” in our overall health spending as cause for alarm. Lichtenberg's research examines the value of this spending in its complete context by exploring whether there are cost offsets associated with using newer and, most often, more expensive drugs. Lichtenberg finds that we are paying more, but we are getting a bigger “bang for our buck.”
Annotated PowerPoint slides related to this article are available.
Assessing the Impact of Pharmaceutical Innovation: A Comprehensive Framework, by Jack A. Meyer, PhD, 2002
The key finding in this report is that new drugs are yielding a wide range of benefits to our society that more than justify the investment needed to produce them. This report develops a comprehensive framework for assessing the value of pharmaceutical innovation that encompasses both the cost of bringing new products to market and the direct and indirect benefits. Fact sheet available.
Combination Drugs: Innovation in Pharmacotherapy, by Albert Wertheimer, PhD and Alan Morrison, PhD, Pharmacy and Therapeutics, Vol. 27, No. 1, January 2002
Combination therapy with two or more agents having complimentary mechanisms of action represents a type of incremental innovation that has extended the range of therapeutic options in the treatment of almost every human disease. Combination products—combinations of two or more active drugs produced in a single tablet—provide the advantages of combination therapy while reducing the number of prescriptions and the attendant administrative costs. This article describes the advantages of combination products and discusses their role in pharmacotherapy.
Note: The CE credit option on this piece has expired. Fact sheet available.
Costs and Benefits of Pharmaceuticals: The Value Equation for Older Americans, by Richard Levy, PhD, Care Management Journals, Vol. 3, No. 3, Spring 2002
Benefits from new pharmaceuticals far outweigh their costs for many key diseases of the elderly. Even incremental improvements in drug therapies contribute substantially to improved care. Chronic illness, disability, and an aging population will drive future health care spending. Pharmaceutical innovation will be an integral part of effective strategies to address this challenge.
Drug Delivery Systems Improve Pharmaceutical Profile and Facilitate Medication Adherence, by Albert I. Wertheimer, MBA, PhD, et al., Advances in Therapy, Vol. 22, No. 6, November/December 2005
Innovations in dosage forms and dose delivery systems across a wide range of medications offer substantial clinical advantages, including reduced dosing frequency and improved patient adherence; minimized fluctuation of drug concentrations and maintenance of blood levels within a desired range; localized drug delivery; and the potential for reduced adverse effects and increased safety. The advent of new large-molecule drugs for previously untreatable or only partially treatable diseases is stimulating the development of suitable delivery systems for these agents. Although advanced formulations may be more expensive than conventional dosage forms, they often have a more favorable pharmacologic profile and can be cost-effective. Inclusion of these dosage forms on drug formulary lists may help patients remain on therapy and reduce the economic and social burden of care. This file is posted here with permission of Health Communications Inc., the publisher of Advances in Therapy®. It is provided for individual use only and may not be used for commercial distribution.
Drug-Related Adverse Events: A Readers' Guide to Assessing Literature Reviews and Meta-Analyses, by Susan D. Ross, MD, Archives of Internal Medicine, Vol. 161, April 23, 2001
The objective of this article is to provide readers with a practical guide to critically appraising reviews and meta-analyses of source studies of drug-related adverse events. A critique of a highly publicized meta-analysis is used as a case study to highlight several contentious issues.
The Effect of New Drug Approvals on HIV Mortality in the U.S., 1987-1998, by Frank R. Lichtenberg, PhD, Economics and Human Biology, Vol. 1, No. 2, June 2003
After increasing steadily from 1987 to 1995, the number of U.S. deaths cause by human immunodeficiency virus (HIV) declined sharply from 1995 to 1998. Evidence suggests that new drugs played a key role in this decline. The annual number of HIV deaths is estimated to have been reduced by over 6,000, on average, by an additional HIV drug approval.
Annotated PowerPoint slides related to this article are available.
The Effect of New Drugs on Mortality from Rare Diseases and HIV, by Frank R. Lichtenberg, NBER Working Paper W8677, December 2001
This article examines the effects of two important government policies designed to provide incentives for the development of pharmaceuticals—the Orphan Drug Act and the FDA fast track for drugs for AIDS and other diseases where current therapies are inadequate. Following implementation of these policies, introduction of new drugs for orphan diseases and HIV/AIDS was found to increase substantially and there was a dramatic, time-lagged reduction in mortality from these diseases. These results suggest that government policy can be an effective lever for stimulating innovation of pharmaceuticals having significant effects on longevity.
Fraction of Nursing Home Admissions Attributable to Urinary Incontinence, by Alan Morrison, PhD, Richard Levy, PhD, Value in Health, Vol. 9, No. 4, July/August 2006
This brief article calculates the proportion of nursing home admissions of the elderly attributable to urinary incontinence (UI) and finds that estimates of the fraction of nursing home admissions attributable to UI exceed those previously assumed and show an imbalance between the sexes. Policies that support reimbursement for treatments of UI in the community might help prevent or delay institutionalization and offset some of the costs.
Health & Productivity as a Business Strategy, 2007
Results from the first in a series of studies among multiple employers aims to quantify the true value of employee health. The study, published in the July issue of Journal of Occupational and Environmental Medicine (JOEM), found that health-related productivity costs were four times greater than medical and pharmacy costs, and the costliest conditions may not be the ones that employers are focusing on. The authors suggest investing in healthy employees can yield substantial economic benefits for companies.
Related materials:
The impact of increased utilization of HIV drugs on longevity and medical expenditure: an assessment based on aggregate US time-series data, by Frank R. Lichtenberg, Expert Review of Pharmacoeconomics & Outcomes Research, Vol. 6, No. 4, August 2006
The objective of this Special Report is to estimate the medical cost per
life-year gained from increased utilization of HIV drugs by estimating
the impact of increased drug utilization on the life expectancy and drug
and hospital expenditure of HIV/AIDS patients, using aggregate (US
national-level) data for the period 1982-2001.
Is Technological Change in Medicine Worth It? by David M. Cutler and Mark McClellan, Health Affairs, Vol. 20, No. 5, September/October 2001
Cutler and McClellan's research explores the relationship between spending and health benefits. They examine several different disease areas and find that, indeed, there are tremendous benefits to be had from the use of pharmaceuticals. In four of five disease areas examined, benefits outweighed costs, and in the fifth disease costs and benefits were equal. Putting a price on life is a difficult task, but Cutler and McClellan calculate that the true cost of some types of care is actually falling because of medical innovation.
View "Measuring the Value of Health Innovations: The Policy Implications of New Medical Technologies," a briefing by the Alliance for Health Reform featuring Mark McClellan, September 7, 2001,
Washington, DC
Annotated PowerPoint slides related to this article are available.
The Link Between Gross Profitability and Pharmaceutical R&D Spending, by F.M. Scherer, Health Affairs, Vol. 20, No. 5, September/October 2001
Scherer points out that the new pharmaceutical discoveries benefiting consumers are being driven by the gross profit margins that pharmaceutical companies make. As profits increase, so does research and development. This ultimately yields new and promising options for consumers. In addition, Scherer finds that medical innovations are leading to longer life and improved quality of life.
View "Measuring the Value of Health Innovations: The Policy Implications of New Medical Technologies," a briefing by the Alliance for Health Reform featuring F.M. Scherer, September 7, 2001, Washington, DC
MedAccess Online Bibliography on Atypical Antipsychotics
This bibliography, developed by Dr. William M. Glazer, President of Glazer Medical Solutions and Associate Clinical Professor of Psychiatry at Massachusetts General Hospital and Harvard Medical School, presents studies demonstrating the value of the atypical antipsychotic medications clozapine, olanzapine, quetiapine, and resperidone.
Newness of Drugs and Use of HMO Services by Asthma Patients, by Susan D. Horn, et al., The Annals of Pharmacotherapy, Vol. 35, No. 9, September 2001
Analyses showed an association between greater use of newer asthma drugs and lower overall drug costs and physician visits. A trend was also found between greater use of newer asthma drugs and fewer hospitalizations and emergency department visits.
Perspectives on the Pharmaceutical Industry, by Uwe E. Reinhardt, Health Affairs, Vol. 20, No. 5, September/October 2001
Reinhardt's research shows that our nation can indeed afford spending on drugs that help us live longer, more productive lives. Spending on
pharmaceuticals accounts for only a small fraction of our Gross Domestic Product (GDP). In fact, Americans spend more per capita on alcohol, tobacco, and entertainment combined than on pharmaceuticals.
Annotated PowerPoint slides related to this article are available.
CD-ROM Prescription Medicines: Returning Value to Patients, Payers and Society, 2003
Studies confirm that indeed, medicines are one of the fastest growing areas of health care spending. And while few can imagine life without the life improving medicines that patients with diabetes, heart disease, cancer, HIV/AIDS, and many others have come to depend on, some have questioned the value of that spending – to the health care system overall and to consumers. In this compilation of materials – much of it peer-reviewed research – we hope to help answer some of the critical questions in this debate.
The Price of Progress: Prescription Drugs in the Health Care Market, by J.D. Kleinke, Health Affairs, Vol. 20, No. 5, September/October 2001
Kleinke's research tells us that increased spending on pharmaceuticals does not explain the insurance premium increases that many consumers are seeing.
He points out that pharmaceuticals are a small fraction of the total equation, and that even though spending on pharmaceuticals is increasing, that rise in expenditures amounts to a small percentage of the premium increases.
View "Measuring the Value of Health Innovations: The Policy Implications of New Medical Technologies," a briefing by the Alliance for Health Reform featuring J.D. Kleinke, September 7, 2001, Washington, DC
The Silver Book: Chronic Disease and Medical Innovation in an Aging Nation
The Silver Book, a project of the Alliance for Aging Research is an almanac of hundreds of facts, statistics, graphs, and information from close to 100 agencies, organizations and experts. It is a searchable database that is constantly updated and expanded in order to highlight the latest research and data on the burden of chronic disease and the value of investing in medical research. The Silver Book database is searchable by specific terms or by sections. The database is also interactive, allowing users to submit data from additional studies and reports.
Sources of U.S. Longevity Increase 1960-2001, by Frank R. Lichtenberg, The Quarterly Review of Economics and Finance, Vol. 44,
No. 3, July 2004
This empirical analysis provides support for the hypothesis that both medical innovation (in the form of new drug approvals) and public health expenditure contributed to longevity increase during the period 1960–2001. Longevity is viewed as the output of the health production function, and output fluctuations as the consequence of fluctuations in medical inputs (expenditure) and technology. The estimates imply that the public health expenditure needed to gain one life-year is about $9640, and that the pharmaceutical R&D expenditure needed to gain one life-year is about $926.
Executive Summary: Too Many Drugs? The Clinical and Economic Value of Incremental Innovations, by Albert Wertheimer, Richard Levy and Thomas O'Connor, 2001
Some believe that incremental advances within the pharmaceutical industry are too costly and do not ultimately benefit the consumer. This is a misconception. The new agents resulting from this evolutionary process can offer advantages in terms of improved efficacy, better patient satisfaction and compliance and, in some cases, greater cost effectiveness.
Annotated PowerPoint slides related to this report are available.
Too Many Drugs? The Clinical and Economic Value of Incremental Innovations, by Albert Wertheimer, Richard Levy and Thomas O'Connor, Research in Human Capital and Development: Investing in Health: The Social and Economic Benefits of Health Care Innovation,
Vol. 14, 2001
The history of clinical pharmacology is characterized by incremental improvements in the safety, efficacy, selectivity, and utility of drugs within a given class. This report makes the case for a fully developed class of drugs to allow precision prescribing in order to achieve optimum outcomes in the most cost effective manner.
Annotated PowerPoint slides related to this article are available.
Urinary Incontinence: Economic Burden and New Choices in Pharmaceutical Treatment, by Richard Levy, PhD and Nancy Muller, Advances in Therapy, Vol. 23, No. 4, July/August 2006
In the year 2000, an estimated 17 million community-dwelling adults in the United States had daily urinary incontinence (UI) and an additional 33 million suffered from the overlapping condition, overactive bladder. Estimates of the total annual cost of these conditions range up to $32 billion. Until recently, pharmaceutical therapy for UI has been limited, especially because the adverse effects of available agents resulted in poor adherence to treatment regimens. Recent innovations in molecular design and new dosage forms of UI medications offer the promise of fewer and less severe adverse effects and, thus, better treatment outcomes for patients. New pharmacologic treatment options for UI have the potential to allow greater independence for older persons who reside at home and to delay or avoid the costs of admission to long-term care facilities. This file is posted here with permission of Health Communications Inc., the publisher of Advances in Therapy®. It is provided for individual use only and may not be used for commercial distribution.
The Value of Incremental Pharmaceutical Innovation for Older Americans, by Albert Wertheimer, PhD, MBA, Thomas W. O'Conner, Jr., PharmD, MBA, and Richard Levy, PhD, 2001
This monograph explains that small incremental improvements within drug classes provide important health benefits, especially for elderly patients. The monograph illustrates therapeutic advantages of these newer drugs in a class including: fewer side effects, improved safety and greater effectiveness; easier use, which facilitates compliance with prescribed regimens; and better tailoring to fit individual patient needs. Fact sheet available.
Executive Summary: The Value of Investment in Health Care: Better Care, Better Lives, 2004
Over the past few decades, significant advances in the U.S. health care system have helped people live longer and better lives. Both mortality and disability rates have fallen consistently since the 1970's. This report endeavors to examine costs in the context of benefits received by focusing on overall improvements in health, as well as taking a specific look at four conditions (heart attack, type 2 diabetes, breast cancer, and stroke) that are among the most common causes of death and disability.
Annotated PowerPoint slides related to this report are available.
The Value of Investment in Health Care: Better Care, Better Lives, 2004
This study looks at the value of investment in health care for overall health care expenditures as well as for expenditures for the management of four key health conditions—heart attack, type 2 diabetes, stroke, and breast cancer. Evidence from a variety of sources shows that the value of the health gains during this time period are higher than the increased health care expenditures during this time period, indicating that these additional investments in health care add value to the U.S. population.
Annotated PowerPoint slides related to this report are available.
CD-ROM The Value of Medical Innovation
This collection of materials on the increasingly important role of pharmaceuticals in health care delivery includes selected research from the Health Affairs September/October 2001 issue, video highlights from the September 7, 2001, Capitol Hill symposium held to discuss research featured in the issue, key points from the research, illustrative charts, and selected news articles covering the research and its implications.
Health & Productivity as a Business Strategy
Results from the first in a series of studies among multiple employers aims to quantify the true value of employee health. The study, published in the July issue of Journal of Occupational and Environmental Medicine (JOEM), found that health-related productivity costs were four times greater than medical and pharmacy costs, and the costliest conditions may not be the ones that employers are focusing on. The authors suggest investing in healthy employees can yield substantial economic benefits for companies.
Related materials:
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