Abstract
Longitudinal, disease-level data are used to analyze the impact of pharmaceutical innovation on longevity (mean age at death), hospital utilization, and medical expenditure in Greece during the period 1995–2010. The estimates indicate that pharmaceutical innovation increased mean age at death by 0.87 years (10.4 months) – about 44% of the total increase in longevity – and that diseases with larger increases in the cumulative number of drugs launched one to four years earlier had smaller increases in the number of hospital days. Real per capita pharmaceutical expenditure increased rapidly during this period, but 62% of the increase in pharmaceutical expenditure was offset by a reduction in hospital expenditure attributable to pharmaceutical innovation. The baseline estimate of the cost per life-year gained from pharmaceutical innovation in Greece is $17,117, which 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.