Fact of the Week: New Drugs Led to 163 Percent Fewer Days of Hospital Care in 2015

April 22, 2019

(Ed. Note: The “Innovation Fact of the Week” appears as a regular feature in each edition of ITIF’s weekly email newsletter. Sign up today.)

Thanks to new drugs in the previous three decades, there are 163 percent fewer days of hospital care in 2015 than would have been required otherwise.

Source: Frank Lichtenberg, “The impact of new drug launches on hospitalization in 2015 for 67 medical conditions in 15 OECD countries: a two-way fixed-effects analysis,” March 2019, CESifo Working Paper No. 7559, Munich Society for the Promotion of Economic Research

Commentary: Debates over drug pricing often consider the impacts on health and innovation, but rarely examine the costs those drugs offset. According to new research examining drug releases for 67 diseases across 15 countries in the three decades from 1982 to 2015, these offsets are dramatic. Without the drugs released since 1981, there would have been 91 percent more hospitalizations and an average of 38 percent longer hospital stays in 2015, resulting in 163 percent more days of care. Further, the hospital expenses this would entail is 5.3 times larger than the expenditure on these drugs in 2015, a savings of $363 billion.