The Value of Medicines
Over the last few decades, scientists have made substantial progress in the discovery of new medicines. Even more dramatic advances are anticipated in the years ahead through research in new fields such as genomics and proteomics.
In the last decade alone, over 300 new medicines have been approved by the FDA. These advances are improving the treatment of common diseases like heart disease, diabetes, and cancer, as well as rare disorders like Fabry's disease, cystic fibrosis, and sickle cell anemia.
Because of these new discoveries, medicines are taking on an increasingly important role in patient care. As a result, we are spending more on pharmaceuticals. In return, more patients are living longer, better lives; overall health care costs are restrained as patients avoid invasive surgeries and costly hospital and nursing home stays; and the economy is strengthened through improved worker productivity.
A growing number of studies are confirming the increasing value of new medicines to patients and society. Medicines can help offset overall medical costs by preventing or delaying the need for other costly services, such as emergency room visits and hospitalizations. For example, a 2009 Medicare study found that use of prescription drugs reduced hospitalization costs for Medicare beneficiaries.[i] In another study, a $1.00 increase in prescription drug spending saved $2.06 in hospital spending.[ii]
New Medicines Save and Improve Lives
New Medicines Help Control Health Care Costs
New Medicines Strengthen the Economy
New Medicines Save and Improve Lives
- New medicines have made a major contribution to the decline in the death rate from HIV/AIDS in the U.S. over the last 10 years. Since the mid-1990s, when researchers developed a new wave of medicines to treat HIV/AIDS, the U.S. death rate from AIDS dropped about 70%.[iii]
- A study sponsored by the Agency for Health Care Policy and Research concluded that increased use of a blood-thinning drug would prevent 40,000 strokes a year, saving $600 million annually.[iv]
- Since 1980, life expectancy for cancer patients has increased about three years, and 83% of those gains are attributable to new treatments, including medicines.[v] Medicines specifically account for 50% to 60% of increases in survival rates since 1975.[vi]
New Medicines Help Control Health Care Costs
- New diabetes medicines are helping patients avoid serious complications and death, and can reduce overall health care spending. In one study, increased patient adherence to diabetes medicines saved $7 for every additional dollar spent on medicines. Patients with the highest level of medication adherence were significantly less likely to be hospitalized and had significantly lower total medical spending than less adherent patients.[vii]
- A 2009 study found that use of prescription medicines significantly reduced Medicare spending for inpatient hospitalizations. The study, using data from before the start of the Medicare prescription drug program, found that each additional prescription medicine filled reduced inpatient hospital costs by $104, or about 5% on average. The average cost of a prescription medicine in the study was $47, for a net savings of $57. Notably, while earlier work conducted by the lead author did not find conclusive evidence of savings from prescription medicines, in this new study, the authors report that this finding “suggests that drugs are not only cost-effective but actually cost saving for Medicare beneficiaries.”[viii]
- New studies are showing how newer, better medicines reduce the cost of treating people with depression. The cost of treating a depressed person fell throughout the 1990s, "largely because of a switch from hospitalization to medication," the Wall Street Journal said in a December 31, 2003 story on the study. The study, published in the Journal of Clinical Psychiatry in December 2003, found that per-patient spending on depression fell by 19% over the course of the decade.[ix]
New Medicines Strengthen the Economy
- In 2006, the most recent year for which a comprehensive analysis is available, biopharmaceutical companies employed more than 686,000 Americans. Each of these jobs supported an additional 3.7 jobs in professional services, wholesale trade companies, building services, real estate, physician offices and hospitals, food and beverage establishments, and retail. In total, the biopharmaceutical sector accounted for 3.2 million direct, indirect, or induced jobs.[x]
- New medicines also benefit the economy by increasing worker productivity and reducing absenteeism. One study, which evaluated the effect of migraine treatment on productivity, found that more than 50% of workers who received a triptan drug injection for a migraine attack returned to work within two hours, compared with 9% of workers who received a placebo.[xi]
- A study in the Journal of Occupational and Environmental Medicine found that patients taking a non-sedating antihistamine for allergies experienced a 5.2% increase in daily work output in the three days after receiving the medication, compared with a 7.8% reduction in work output for workers receiving sedating antihistamines.[xii]
- The National Committee for Quality Assurance (NCQA) says that "if every American with depression received care from a health plan or provider that was performing at the 90th percentile level, employers would recover up to 8.8 million absentee days a year."[xiii] NCQA also reported that only 40.1% of patients with depression "received effective continuation phase treatment."
[i] B. C. Stuart, J. A. Doshi, and J. V. Terza, “Assessing the Impact of Drug Use on Hospital Costs,” Health Services Research 44, no. 1 (2009): 128–144.
[ii] B. Shang and D. P. Goldman, “Prescription Drug Coverage and Elderly Medical Spending,” National Bureau of Economic Research Working Paper 13358, September 2007.
[iii] U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Health Statistics, Health, United States, 2009 With Chartbook on Medical Technology (Hyattsville, MD: HHS, 2010).
[iv] D. B. Matchar, G. P.Samsa, Secondary and Tertiary Prevention of Stroke, Patient Outcomes Research Team (PORT) Final Report - Phase 1, AHRQ Pub. No. 00-N001, Rockville, MD: Agency for Healthcare Research and Quality, June 2000.
[v] E. Sun, et al., “The Determinants of Recent Gains in Cancer Survival: An Analysis of the Surveillance, Epidemiology, and End Results (SEER) Database,” Journal of Clinical Oncology 26, suppl. 15 (2008): Abstract 6616.
[vi] Frank R. Lichtenberg, "The Expanding Pharmaceutical Arsenal in the War on Cancer," National Bureau of Economic Research Working Paper No. 10328 (Cambridge, MA: NBER, February 2004).
[vii] M. C. Sokol, et al., “Impact of Medication Adherence on Hospitalization Risk and Healthcare Cost,” Medical Care 43, no. 6 (2005): 521–530.
[viii] B. C. Stuart, J. A. Doshi, and J. V. Terza, “Assessing the Impact of Drug Use on Hospital Costs,” Health Services Research 44, no. 1 (2009): 128–144.
[ix] PE Greenberg, et al., "The Economic Burden of Depression in the United States: How Did It Change Between 1990 and 2000?" Journal of Clinical Psychiatry, 64 (2003): 1465-1475.
[x] Archstone Consulting, LLC and L. R. Burns, The Biopharmaceutical Sector’s Impact on the U.S. Economy: Analysis at the National, State, and Local Levels (Washington, DC: Archstone Consulting, March 2009).
[xi] R.C. Cady, et al., "Sumatriptan Injection Reduces Productivity Loss During a Migraine Attack: Results of a Double-Blind, Placebo-Controlled Trial," Archives of Internal Medicine,158 (11 May 1998).
[xii] I.M. Cockburn, et al., "Loss of Work Productivity Due to Illness and Medical Treatment," Journal of Occupational and Environmental Medicine, 41 (1999): 11, 948-953.
[xiii] National Committee for Quality Assurance, State of Health Care Quality: 2002 (Washington, DC: NCQA, 2003).
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