NCPA - National Center for Policy Analysis


January 30, 2009

Innovation in prescription drugs is helping improve Americans' overall health, according to a Manhattan Institute report by Columbia University health economist Frank Lichtenberg.  States where newer drugs were adopted more quickly had smaller increases in disability rates.

To date, however, little research has been done regarding whether these innovations have helped Americans avoid the potential for severe disability that often accompanies chronic illness and aging. The answer, Lichtenberg says, would have serious potential consequences for our nation's economy and for safety-net programs such as Medicare.

Using data on Medicaid prescriptions for 30 therapeutic groups, which account for virtually all Medicaid medicines dispensed, Lichtenberg found that an important factor in the size of a given state's disability rolls is its average drug "vintage" -- how long ago the active ingredients of drugs used by its residents received Food and Drug Administration (FDA) approval:

  • States in which the difference between average vintage of Medicaid prescriptions in 1995 and average vintage in 2004 was the largest -- meaning where newer drugs were adopted more quickly -- had the smallest increases in disability rates.
  • In California, Connecticut, Idaho, Maryland and Rhode Island -- the five states where the difference was the largest -- the number of disability recipients per 100,000 working-age people increased by 800.
  • In Alabama, Louisiana, Oklahoma, Texas and West Virginia -- the five states in which the difference was the smallest -- the number of disability recipients per 100,000 working-age people increased by 1,400, a rate of increase 75 percent greater than the first 5 states.

Furthermore, without these gains, the rate of increase at which working-age people were classified as disabled would have been 30 percent higher, resulting in 418,000 additional people receiving disability payments in 2004.  Social Security benefits paid to this population would have amounted to an additional $4.5 billion, concludes Lichtenberg.

Source: Paul Howard, "Faster Drug Adoption Saves Lives," Health Care News (Heartland Institute), January 2009; based upon: Frank R. Lichtenberg, "Why Has Longevity Increased More in Some States than in Others? The Role of Medical Innovation and Other Factors," Medical Progress Report (Manhattan Institute), No. 4, July 2007.

For Lichtenberg text:  


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