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The 130th Annual Meeting of APHA |
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The 130th Annual Meeting of APHA |
James W. Shaw, PharmD, MS1, William C. Horrace, PhD2, and Ronald J. Vogel, PhD1. (1) College of Pharmacy, The University of Arizona, P.O. Box 210207, 1703 East Mabel Street, Tucson, AZ 85721-0207, (520) 631-3158, shaw@pharmacy.arizona.edu, (2) Department of Economics, College of Business and Public Administration, The University of Arizona, McClelland Hall 401, P.O. Box 210108, Tucson, AZ 85721-0108
Purpose: The purpose of this research was to study the effects of pharmaceutical expenditures on levels of health in the member countries of the Organization for Economic Cooperation and Development (OECD).
Background: There have been relatively few econometric studies of the health effects of pharmaceutical expenditures. One recent study published by economists Frech and Miller has some serious econometric flaws. We sought to develop alternate specifications for Frech and Miller's models using aggregate data from the OECD Health Data 2000 database.
Methods: Our sample included 21 of the 30 member countries of the OECD. Models for predicting average life expectancy at birth, age 40, age 60, and age 65 were developed. Regressors included per capita gross domestic product (GDP), the proportion of GDP allocated to pharmaceuticals, and the proportion of GDP spent on non-drug health care in 1985 (in 1990 $US). We also controlled for a number of lifestyle factors including animal fat consumption, alcohol consumption, and the percentage of smokers in 1983. A log-linear functional form was used in each of the models, and a nonparametric bootstrapping technique was used to ascertain the significance of parameter estimates.
Results: Models using total population data explained between 79% and 86% of the variance in life expectancy. The most important predictor of life expectancy at any age was per capita GDP. Elasticities ranged from 0.06 in the model for life expectancy at birth to 0.19 in the model for life expectancy at age 65. Pharmaceutical consumption had a positive effect on life expectancy, with elasticities ranging from 0.02 in the model for life expectancy at birth to 0.07 in the model for life expectancy at age 65. Non-drug health care expenditures had no discernable effect on life expectancy in any of the models. We also found no evidence that factors such as alcohol, tobacco, or animal fat consumption have an effect on life expectancy after controlling for GDP and pharmaceutical expenditures.
Conclusions: In a sample of developed countries, we found that pharmaceutical consumption, as measured by the proportion of GDP allocated to pharmaceuticals, has a positive effect on total population life expectancy at various ages. The marginal effect of pharmaceutical consumption is greater than has been previously reported and appears to decline with increasing age. Based on marginal effects, the US would fare better than most countries by increasing its proportion of GDP spent on pharmaceuticals. However, increases in per capita pharmaceutical expenditures appear to have less of an effect in the US than in many other countries.
Learning Objectives: At the conclusion of this presentation, the learner will be able to
Keywords: Drugs, Health
Presenting author's disclosure statement:
I do not have any significant financial interest/arrangement or affiliation with any organization/institution whose products or services are being discussed in this session.