Pharmaceutical consumption leads to significantly longer lives and lower health care costs, according to a new study published by AEI. The study is an important breakthrough in the debate about health care resource allocation.
The Productivity of Health Care and Pharmaceuticals (AEI Press; March 15, 1999) contradicts the commonly-held belief that, among rich countries, the marginal return from health care consumption in general, and from pharmaceutical consumption in particular, is negligible. Authors H. E. Frech III and Richard D. Miller Jr. find there is a measurable health return to higher consumption of pharmaceuticals--especially at middle age and beyond.
Frech, a professor of economics at the University of California, Santa Barbara, and an adjunct scholar at AEI, and Miller, a research analyst with the Center for Naval Analyses, also show that pharmaceutical use correlates with health care cost savings, but that savings vary according to a country’s level of use. For forty-year-old men, savings estimates range from $60,000 per life year in France, a high-use country, to roughly $3,800 in Turkey, a low-use country.
The Productivity of Health Care and Pharmaceuticals provides a more comprehensive and reliable basis for measuring the health effect of pharmaceutical consumption than earlier international comparisons.
