NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

New Laboratory Procedures Increase Life Expectancy

"The new laboratory procedures introduced during 1990-8 are estimated to have saved 1.13 million life-years in 1998. The expenditure per life-year gained from the new lab procedures is estimated to be $6,093."

Economists believe that the development of new products is the main reason why people are better off today than they were several generations ago. New goods are usually the result of investment in research and development (R and D), and data from the National Science Foundation reveal that the medical-equipment-and-supplies industry is one of the most research-intensive industries in the economy. The ratio of R and D expenditure to sales in that sector is two and a half times as high as in the average American industry.

In The Impact of New Laboratory Procedures and Other Medical Innovations on the Health of Americans, 1990-2003: Evidence from Longitudinal, Disease-Level Data (NBER Working Paper No. 12120), Research Associate Frank Lichtenberg examines the impact of a subset of the new products generated by this industry -- clinical laboratory products -- on the longevity and quality of life of Americans. Specifically, he measures innovation in five types of medical procedures or products: pathology and laboratory procedures, outpatient prescription drugs, inpatient prescription drugs, surgical procedures, and diagnostic radiology procedures.

The FDA data he uses indicate that about 100 of these new products have been introduced in the last decade. Lichtenberg hypothesizes that these new products have improved the quality of information that physicians and patients have about the patients' medical conditions, and therefore have enabled more appropriate and effective treatment of those conditions. Two new kinds of tests aptly illustrate this result: HIV tests; and, genetic tests related to dosing of a widely prescribed anti-blood clotting drug.

For almost two decades, HIV tests had two glaring flaws. They did not detect the earliest stage of infection, when people were more likely to spread the virus. And, they took days to produce results, so that many people never returned to learn whether they were infected. New generations of tests can largely eliminate either the long waiting time for results or the failure to find early infections.

Similarly, about two million Americans take warfarin (Coumadin) each day to help prevent blood clots because of problems like a heart attack, an abnormal heart rhythm, a stroke, or major surgery. Establishing the proper dose of warfarin when patients begin taking the drug is one of the trickiest problems in medical practice. Misjudgments in doses can critically affect the clotting mechanism, leading to potentially fatal bleeding. At present, doctors rely on costly blood tests that must be repeated frequently over a period of months to adjust the dose and ensure that the drug will work safely. But a recent study suggests that it may be possible to develop a standard genetic test that would allow doctors to quickly and precisely choose a safe starting dose of warfarin. That would have significant treatment and health implications.

Lichtenberg finds that medical conditions with higher rates of innovation in lab procedures and outpatient drugs experienced larger increases in the mean age at death, after controlling for other medical innovation rates and the initial mean age at death. The increase in mean age at death attributable to the use of new lab procedures between 1990 and 1998 is estimated to be about 6 months. This represents 42 percent of the total increase in mean age at death (1.18 years) in the sample of diseases studied here.

The new laboratory procedures introduced during 1990-8 are estimated to have saved 1.13 million life-years in 1998. The expenditure per life-year gained from the new lab procedures is estimated to be $6,093. So, treatments that cost this amount generally are considered to be quite cost-effective.

The 1998 data used here come from 92 firms. The people covered by these firms' health plans used about 22 million outpatient and inpatient lab, surgical, drug, and diagnostic radiology procedures. The total cost of these procedures was $1.94 billion. The average cost of new lab procedures was only $1 higher than the average cost of old lab procedures ($24). For other types of procedures, the average cost of new procedures was anywhere from 1.8 to 11 times higher than the average cost of the old procedures. Lab procedures accounted for 60 percent of the total number of procedures performed, but for only 17 percent of the total expenditure on these procedures

-- Les Picker

The Digest is not copyrighted and may be reproduced freely with appropriate attribution of source.
 
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