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Activity Number:
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92
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Type:
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Topic Contributed
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Date/Time:
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Monday, July 30, 2007 : 8:30 AM to 10:20 AM
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Sponsor:
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Section on Health Policy Statistics
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| Abstract - #308423 |
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Title:
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Is Newer Always Better? Re-evaluating the Benefits of Newer Pharmaceuticals
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Author(s):
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Michael Law*+ and Karen Grépin
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Companies:
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Harvard Medical School/Harvard Pilgrim HealthCare and Harvard University
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Address:
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133 Brookline Ave, Boston, MA, 02215,
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Keywords:
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Prescription Drugs ; Propensity Score Matching ; Drug Offsets ; Health Care Costs
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Abstract:
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Whether newer pharmaceuticals justify their higher cost by "offsetting" other health spending (such as hospital services) is an important health policy question. We aimed to replicate a previous analysis which suggests the savings from newer drugs substantially outweigh their additional cost. We find the results are highly dependent on the model and dataset used: substituting either a model less sensitive to outliers or a newer data release results in the effect disappearing; substituting both causes it to reverse in direction. Further, we propose an alternative model using propensity score matching and a two-part expenditure model, which we estimate for hypertension. We find using a newer drug is associated with $179 higher annual drug costs, but the change in non-drug spending is indistinguishable from zero. Thus, we find no evidence of offsets from these medications.
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