Pharmaceutical innovation measures

Berndt, Cockburn, and Grepin (2005) employ the number of medical indications to measure pharmaceutical innovation. A substantial share of industry research and development expenditures, estimated at between 25% and 30% (p. 45), is directed toward finding new indications for existing products. Berndt et al. use the term incremental innovation to describe these efforts. For the three therapeutic areas they examined, the number of FDA approvals for new indications increased substantially in the past decade (p. 27). In addition, the greater number of approved indications has led to increased utilizations of the drugs concerned (p. 41). On that basis, they maintain that reported declines in pharmaceutical research productivity are overstated. 

Lichtenberg (1996) compiled data on hospital deaths and pharmaceutical innovation based on the National Ambulatory Medical Care Survey (NAMCS). For a number of specific disease states, he constructed a measure of pharmaceutical innovation using the dissimilarity between drugs prescribed to the early 1980 cohort in a given disease category, and drugs prescribed in the later 1991 cohort. A greater dissimilarity between... 

To improve resource allocation, measuring the benefits of pharmaceutical innovation is an important first step. Fortunately, the number of empirical studies measuring the value of health investment, including spending on health care in general and on pharmaceuticals in particularly, has increased rapidly in recentyears (see Cremieux et al.. Chapter 12). But, unfortunately, most of this research has been based on data from only two countries, the United States and Canada. 

Although the empirical measures of pharmaceutical innovation are diverse, the studies consistently indicate that technological change in pharmaceuticals leads to better health outcomes. Nevertheless, existing methods... 

We used the cumulative number of drugs with NMEs approved and launched in Taiwan to measure pharmaceutical innovations. The annual number of NMEs introduced into Taiwan between 1985 and 2002 followed cyclic patterns (Fig. 13.1). In 1985, 95 NMEs were introduced in this market. This number decreased to 52 and 49 in the next two years, but increased subsequently. In 1995 only 15 NMEs were introduced, possibly reflecting delays in approvals caused by the transition from the then-existing health care financing system to national health insurance in Taiwan in that year. ... 

Using the above measures for pharmaceutical innovation and health outcomes, we constructed panel data for disease-specific health outcomes and the cumulative number ofNMEs for each disease category. We hypothesized that diseases associated with a higher rate of pharmaceutical innovations would experience greater improvements in health outcomes. 

Using data shown in Figure 13.4, we used ordinary least squares to estimate the effect of the probability of survival to age 65 on life expectancy at birth and found a significantly positive association between these two measures a 10% increase in probability of survival to age 65 was associated with a 1.3% increase in life expectancy. This result, combined with the estimates in Tables 13.2 and 13.3, implies that a 10% increase in the stock of pharmaceutical innovation would lead to an increase in life expectancy at birth by 0.10% (i.e., 0.8% X 1.3%) to 0.18% (1.4% x 1.3%). 

The research reported in this chapter has examined the association between pharmaceutical innovations and health outcomes, using the cumulative number of NME launches in Taiwan as a measure of innovations. Based on a disease-specific panel, we found a statistically significant, positive relationship between the stock of pharmaceutical innovation available in Taiwan s market and the probability of survival to age 65, after accounting for the economic and social trends. We investigated the effect of pharmaceutical innovation on life expectancy with two different approaches. Both approaches yielded similar results. Our low bound or conservative estimate suggests that a 10% increase in the stock of pharmaceutical innovation led to an increase in life expectancy at birth by about 0.1%. 

There are several limitations in our study as well as in previous studies that have sought to quantify the health benehts of pharmaceutical innovation. First, we measured health outcomes only in terms of deaths averted. As documented by Cutler (2004) and others, pharmaceutical innovation may also increase quality of life and labor force productivity. For this reason, our study underestimates the contribution of pharmaceutical innovation to improved health outcomes. 

Methodology for Measuring the Effects of Regulation on Pharmaceutical Innovation... 

This paper examines the impact of regulation on pharmaceutical innovation in the United States and the methodological problems involved when one attempts to measure pharmaceutical innovation. Data describing the rate and manner of passage of new chemical entities (NCEs) through the U.S. regulatory system and the national origin of NCEs marketed in the U.S. are presented. 

There are several possible ways of measuring pharmaceutical innovation, but all present technical problems. Two general... 

The national origin of NCEs introduced onto the U.S. market is a key measure of the location of pharmaceutical innovation, and of changes in location. The number and nature of drugs discovered or originated in each country are important because these data reflect the scientific climate, as well as regulatory and... 

Since factors other than innovation, such as commercial considerations affecting foreign entry onto the U.S. market, influence the observed patterns, analysis of the national origin of NCEs using the definitions employed here is not a highly sensitive or specific measure of pharmaceutical innovation. However, the observed trends are consistent with the tightening of regulatory policies first in the U.S. and then subsequently abroad. 

Since the techniques for measuring pharmaceutical innovation, in particular its scientific and medical value, are not yet well developed, alternative approaches to absolute measures of innovation should be explored. An obvious alternative is the international comparative approach, comparing the performance of drug innovation under the U.S. regulatory system with the performance of drug innovation systems in other countries having different types and amounts of regulation. 

Assessing the impact of increased product liability on pharmaceutical firms is difficult. No data exist to measure R D and other business costs attributable to product liability. The little systematic research done to date on whether product liability affects the rate of pharmaceutical innovation has yielded inconclusive results. Evidence drawn from the experiences of particular products or from interviews with industry executives indicates liability may inhibit or preclude R D or marketing of reproductive-related vaccines and products. 

Despite the difficulties in accounting for the variation across Europe there have been efforts to develop measures that could improve pharmaceutical innovation in the region as a whole. As the... 

Numerous applications for biocides have been found in fields as diverse as ethical pharmaceuticals and cat litter products. The aim of this Cl book is two-fold to provide a comprehensive guide to the use of biocides across a range of applications and to aid in the selection of a biocide that is "fit for purpose". It covers a Cl cross-section of traditional measures, novel ideas and innovative developments, as well as addressing the biocides market, the political outlook and future trends of biocide use. 

The analysis of the contribution made by increased pharmaceutical spending to the growth in the per capita intensity of health resources suffers from major measurement problems that deprive available indicators of any value. Traditional pharmaceutical price indexes (such as the Laspeyres index, used to calculate the pharmaceutical component of the consumer price index) provide little relevant information in a market in which the introduction of therapeutic innovations is of prime importance the indexes show an apparent freeze, and sometimes even a steep drop (as in the Spanish case). However, the steady rise in the average price per prescription paints a very different picture. 

This book consists of a series of works that evaluate various aspects related to the public financing of pharmaceuticals. In all health systems with majority public funding, the financing of pharmaceuticals constitutes one of the key factors in reform policies and health cost containment measures. This importance of pharmaceutical spending can be explained by both its relative size (its share within health expenditure as a whole), and its rapid growth, which is closely related to the constant incorporation of therapeutic innovations. 

In Chapter 4 Aidan Hollis examines three proposals in considerable detail. The first is an Advanced Purchase Commitment by sponsors, who offer an explicit subsidy in advance for innovative products. The subsidy offer includes a fixed-dollar amount per unit as well as a commitment to purchase a specific number of units at that price. The second proposal is that sponsors pay annual rewards based on the therapeutic effectiveness of innovative drugs. The third approach is to offer a patent extension on patented products to pharmaceutical companies if they successfully developed a vaccine for a disease such as HIV/AIDS that is highly prevalent, particularly in some low-income countries. Hollis concludes that the third approach is an extremely inefficient way to reward innovation. By contrast, the second approach could correct the market failure directly by rewarding innovative drugs according to their therapeutic effectiveness, which is measurable by cost-effectiveness analysis, a topic discussed later in greater detail in Chapters 10 and 11. 

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