Dimensions: 6'' x 9'' 90 pages AEI Press  (Washington) Publication Date: March 2004 Paperback ISBN: 084474194-9 Price: $ 15.00 Add to Cart   Examination Copies

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For many years, health policy in developed countries has rested on the assumption that health-care consumption does relatively little to produce better health. This new study shows that it is time to rethink conventional wisdom, particularly regarding consumption of pharmaceuticals. In this sequel to their 1999 book, The Productivity of Health Care and Pharmaceuticals: An International Comparison, Richard D. Miller Jr. and H. E. Frech III extend their analysis to quality of life, disease-specific life expectancy, and the impact of obesity. This is possible because of newly available data from the World Health Organization and the Organisation for Economic Co-operation and Development (OECD) on disability-adjusted life expectancy, obesity, and disease-specific death rates.

Employing a logical econometric model, Miller and Frech focus on eighteen member countries of the OECD. They find that pharmaceutical consumption is even more powerful in improving the quality of life than in improving the length of life. They find variation by cause of death and by age. For individuals under seventy, pharmaceutical consumption lowers circulatory disease mortality but has little effect on mortality due to either cancer or respiratory disease. At later ages, pharmaceutical consumption generally has a stronger impact.

The fact that pharmaceutical consumption produces better health lends support to proposals to increase coverage of drugs in both public and private health insurance systems. Most fundamentally, it shows that policy should no longer be based on the assumption that health-care consumption does not improve health, but rather on a new understanding that such consumption—especially pharmaceutical use—does matter.

Richard D. Miller Jr. is a Senior Research Analyst at the Institute for Public Research within The CNA Corporation in Alexandria, Virginia. He has also worked as an economist for the Bureau of Labor Statistics in Washington, D.C.

H. E. Frech III is professor of economics at the University of California, Santa Barbara, and an adjunct professor at Sciences Po in Paris. He has also been an economist in the predecessor of the U.S. Department of Health and Human Services.