The life expectancy gains from pharmaceutical drugs: a critical appraisal of the literature

Several studies suggest that, on the basis of life expectancy (LE) regressions, new pharmaceutical drugs are responsible for some of the marked gains in LE observed over the last 50 years. We critically appraise these studies. We point out several modeling issues, including disentangling the contribution of new drugs from advances in disease management, changes in the distribution of health care and other confounding factors. We suggest that the studies estimates of pharmaceutical productivity are implausibly high. Some of the models have very large forecast errors. Finally, the models that we replicated were found to be sensitive to seemingly innocuous changes in specification. We conclude that it is difficult to estimate the bio-medical determinants of LE using aggregate data. Analyses using individual level data or perhaps disease specific data will likely produce more compelling results.  Grootendorst acknowledges support from the Premier’s Research Excellence Award and the research program into the Social and Economic Dimensions of an Aging Population centred at McMaster University that is primarily funded by the Social Sciences and Humanities Research Council of Canada (SSHRC) and which has received additional support from Statistics Canada. Grootendorst thanks Marie Dean and seminar participants at the University of Toronto, the 2006 meetings of the Canadian Association for Health Services and Policy Research and the 2007 International Health Economics Association meetings for helpful comments on an earlier version of this manuscript. JEL keywords: I12, I18