The effect of pharmaceutical innovation on longevity, hospitalization and medical expenditure in Turkey, 1999-2010

We investigate the impact of pharmaceutical innovation on longevity, hospitalization and medical expenditure in Turkey during the period 1999-2010 using longitudinal, disease-level data. From 1999 to 2008, mean age at death increased by 3.6 years, from 63.0 to 66.6 years. We estimate that in the absence of any pharmaceutical innovation, mean age at death would have increased by only 0.6 years. Hence, pharmaceutical innovation is estimated to have increased mean age at death in Turkey by 3.0 years during the period 1999-2008. We also examine the effect of pharmaceutical innovation on hospital utilization. We estimate that pharmaceutical innovation has reduced the number of hospital days by approximately 1% per year. We use our estimates of the effect of pharmaceutical innovation on age at death, hospital utilization and pharmaceutical expenditure to assess the incremental cost-effectiveness of pharmaceutical innovation, i.e., the cost per life-year gained from the introduction of new drugs. The baseline estimate of the cost per life-year gained from pharmaceutical innovation is $2776. Even the latter figure is a very small fraction of leading economists' estimates of the value of (or consumers' willingness to pay for) a one-year increase in life expectancy.