Unbiased Analysis of Today's Healthcare Issues

Does prescription drug coverage save lives?

Written By: Jason Shafrin - Mar• 22•18

If we’re talking about Medicare’s Part D expansion to cover prescription drugs, the answer is yes according to a paper by Dunn and Shapiro (2018).

We examine the impact of Medicare Part D on mortality for the population over the age of 65. We identify the effects of the reform using variation in drug coverage across counties before the reform was implemented. Studying mortality rates immediately before and after the reform, we find that cardiovascular-related mortality drops significantly in those counties most affected by Part D. Estimates suggest that up to 26,000 more individuals were alive in mid-2007 because of the Part D implementation in 2006. We estimate the welfare benefit from lives saved to range from $1.5 to $4.8 billion.

An ungated version of their working paper is available here.

Hat tip to Kevin Lewis.

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3 Comments

  1. Nice article!

    I like this post.

  2. Robert J. Sobel, M.D. says:

    Yes, the upside of giving our patients access to the proven agents (antihypertensives, statins, diabetes drugs) is unequivocal. A system that respects and fosters patient-physician relationships and eliminates barriers to access to these pharmaceuticals should indeed be lifesaving.

    The problem lies in the cost excesses that still apply to a large subset of available drugs, the need for multiple bureaucratic layers to coerce patients and physicians in ways that can be opaque and may not achieve their cost-saving rationale, and the telescoping of R & D profit return into a compressed drug life-cycle. This latter phenomenon was accelerated by the Hatch-Waxman Act and has led to some lifesaving drugs being priced at levels that fail cost-effective analyses.

    As a physician who feels strongly that clinical autonomy will serve the medical common most effectively, I believe we have a duty to change the pharmaceutical pricing scheme that was imported into Medicare Part D to one that offers long-term exclusive marketing contracts in exchange for a regulated pricing system. This would allow new and old agents to co-exist, reduce the need for the current, dangerous third party interference in clinical decision making, and, if administered carefully, truly “bend the cost curve” toward a more sustainable path.

    There are huge bubbles in the price of drugs. With these tools being true biologic inventions whose long-term risk-benefit can include reduced mortality, we deserve a more rational market than the artificial dichotomy of the Hatch-Waxman Act.

  3. tom says:

    love the article, Amazing post

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