Widely cited research suggesting that newer drugs “pay for themselves” is unreliable and should not guide policymakers until more valid research is undertaken, say Yuting Zhang and Stephen Soumerai of Harvard Medical School in a paper in the current issue of Health Affairs.
In Health Affairs [free access] and elsewhere, Frank Lichtenberg of Columbia University has claimed that in the aggregate, using newer medications reduces spending on other health care items, such as hospitalizations, by much more than it increases prescription drug spending. However, Zhang and Soumerai say that Lichtenberg failed to eliminate “potential selection biases, especially whether the use of a given medication precedes, is contemporaneous with, or follows nondrug health care costs in a given year.” Zhang and Soumerai say that no aggregate-level analysis of new versus old drugs can yield valid estimates of cost offsets. What is needed, they say, is rigorous research looking at how specific drugs or drug classes influence costs and outcomes for patients over time.
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“Zhang and Soumerai have done everything they can think of to make the new drug cost offset effect disappear, or appear to disappear. Some features of their analysis make very little sense; others are clearly incorrect. (I provided extensive assistance to them but am not responsible for the deficiencies in their analysis.) Nevertheless, my key finding—that, in general, using newer drugs has reduced nondrug costs more than it has increased drug costs—survives their assault.”