New drugs cut medical costs, Japan told

15 July 2001

The benefits to society of new drugs greatly exceed their costs, and arefelt in three directions: increased longevity; a net decrease in overall medical expenditure; and improved quality of life, according to Frank Lichtenberg of the Columbia University Graduate School of Business, USA. He told delegates at a recent symposium held in Tokyo, Japan, by Nihon Keizai Shimbun (reported by the Nikkei Weekly; see also Marketletter July 16), that government policies which inhibit the development of new, innovative products deprive society of these benefits.

Reporting the findings of his study of over 20,000 patients, controlled by age, sex, race, education, income, diagnosis, medical insurance, period of illness and complications, Prof Lichtenberg said this clearly demonstrated a net aggregate reduction in medical costs resulting from replacing old drugs with new ones. Given that new drugs cost more than old ones, he said that switching to the former would raise the cost of a prescription by about $18. However, he estimates that, by using the new drug, other medical services, including hospitalization and emergency treatment, would be cut by $71, with a net saving of about $53.

Price restrictions discourage investment

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