Do newer prescription drugs pay for themselves? A reassessment of the evidence

Abstract

Citing evidence from studies conducted by Frank Lichtenberg, some health policy advocates have argued that, on average, use of new prescription drugs reduces total health care costs. While recognizing that the cross-sectional research design cannot guard against many biases that could overstate the results, we replicated the original study results and examined the findings' sensitivity to different analytical approaches. Using the same data, we were able to replicate the original results; however, the original findings are not maintained under plausible alternative assumptions. More rigorous research on specific drugs and conditions is necessary before one can claim that newer drugs lower total health care costs.