About the Author. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .i About New Directions for Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .i Acknowledgements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .i Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ii Framework. ................................................................................1 Key Fact s and Trends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 The Increase in the Importance of Chronic Illness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 The Aging of the Population. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

The Evidence on the Impact of Pharmaceutical Innovation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Traditional Approach to Research: Focus on Health Status and Health Care Spending. . . . . . . . . . . . . . . . . . . . . . . . .8 Analyses of New Technologies and Innovations in Pharmaceuticals: Health and Economic Effects. . . . . . . . . . . . . . . . .9 New Approach: Aggregate Studies Across All Drugs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Enhanced Health Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Evaluating the Impact of All New Drugs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 International Comparisons of the Value of Drugs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 Comparing Pharmaceutical Benefits Among U.S. Regions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Looking Ahead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 Reductions in Overall Health Care Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 Macro-Analyses of the Impact of New Drugs on Overall Health Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 Increased Economic Growth and Productivity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 Stimulating Economic Growth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 Enhancing Productivity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

and directed research on health care issues for several major foundations as well as federal and state government and the
business sector. He has led projects developing policy options for reforming the overall health care system and directed
research on employers’ innovations in health care purchasing. Many of these projects have highlighted new strategies for
extending health insurance coverage to the uninsured. Dr. Meyer is the author of numerous books, monographs, and
articles on topics including health care, welfare reform, and policies to reduce poverty.

and government through policy research and analysis, strategic planning, and program evaluation. NDP’s purposes are to promote more effective operation of the health care system, and to aid the development of sound public policy on health care and social welfare issues. NDP analyzes the forces driving health care spending, designs innovative strategies to