As a class, higher-priced new drugs reduce need for hospitalization


By Alicia Ault

NEW YORK (Reuters Health) – Despite carrying a higher price tag, newer brand-name medications reduce overall health spending more than older, lower-priced drugs, according to study results released Thursday.

Frank Lichtenberg, a business professor at New York's Columbia University, examined federal data on a random sample of the US population and determined that people taking more recently approved medications had a longer lifespan and lower health costs, largely because they had fewer hospital stays.

"People who are taking newer drugs are significantly less likely to be hospitalized than those taking older drugs," Lichtenberg told Reuters Health. "On average, newer drugs are better than older drugs, and are worth the money." Lichtenberg's report appears in the September/October issue of Health Affairs.

Overall, taking new therapies resulted in a reduction in non-drug spending of $71.09, which far outweighs the average $18 increase in money spent on those new drugs, said Lichtenberg. The absolute benefit was better for people over age 65 than for younger individuals, but overall spending is also higher for the older age group, he noted.

Lichtenberg cautioned against using his study to support conclusions about specific drugs, noting that the numbers of patients he studied with any particular condition were relatively small.

He used the Agency for Health Care Research and Quality's Medical Expenditure Panel Survey (MEPS) for 1996 to make his calculations. That database holds information about prescriptions, physician office visits, hospitalizations and home healthcare on 23,230 people who took slightly more than 170,000 medications for multiple different conditions.

In the study, "new" drugs were defined as those approved by the US Food and Drug Administration in the years just prior to 1996. Only about 17% of the drugs taken by patients in the MEPS database were approved in the 1990s, while more than half were approved before 1980 and one-fourth were approved before 1950.

With use of the new drugs, the likelihood of being hospitalized went down by 0.5%, Lichtenberg found. Given that hospital stays average $8,000, expected hospital costs would decrease by $40 to $50, he said.

The study did have limitations, Lichtenberg acknowledged. The only measure of drug quality was how recently it had been approved by the FDA. Also, the database could not account for whether a drug taken for one condition might affect the outcomes or spending for another.

But, he concluded, "If there was little therapeutic benefit from new drugs, you would not see any benefit, and we're seeing that the average benefit is quite high."

Lichtenberg's study was funded by the National Pharmaceutical Council, a non-profit group that is supported by pharmaceutical companies.

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