Alive And Working: How Access To Newer Drugs Keeps Americans Off Disability Roles

Main Category: Public Health
Article Date: 28 Oct 2008 - 10:00 PDT

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Today, October 28, 2008, the Center for Medical Progress at the Manhattan Institute, released a new report authored by Columbia University professor Frank Lichtenberg, entitled "Alive and Working: How access to newer drugs keeps Americans off disability roles." In this study, Dr. Lichtenberg demonstrated that the use of newer prescription drugs, one type of medical innovation, has helped reduce the growth in U.S. disability rates.

By examining patterns in drug prescription in 49 of the 50 states from the period of 1995-2004, Dr. Lichtenberg determined that a state's average drug vintage, or how recently the drugs active ingredients was approved by the FDA, was a significant factor in determining the size of disability rolls. In the states where the average drug vintage was more recent, the disability rates rose more slowly.

Overall impact of new drugs on disability rates and expenditure

- The disability rate would have been 30% higher
- 418,000 more Americans would have been disability recipients
- The cost of Social Security disability payments would have been $4.5 billion dollars higher

Impact on States

- California, Idaho, Rhode Island, Maryland, and Connecticut had the lowest increases in number of disability recipients

- Oklahoma, Alabama, Texas, Louisiana, and West Virginia, had the largest increases ,75% greater than the first five states, in number of disability recipients

As policymakers grapple with falling tax receipts and severe budget constraints, they must search for ways to reduce program expenditures-or at least, to slow their rate of growth. In this regard, measures to keep working-age Americans off disability rolls-for instance, through access to improved medical innovations-should be particularly welcome.

Importance of findings

- Access to newer drugs will keep more Americans off disability rolls and allow them to remain wage earners and taxpayers
- States should consider how keeping their citizens in better health today can help offset future safety net spending

Frank Lichtenberg currently serves as the Courtney C. Brown Professor of Business at the Columbia University Graduate School of Business as well as a research associate of the National Bureau of Economic Research. His work has focused on how new technologies affect the productivity of companies, industries, and nations.

The Manhattan Institute, a 501(c)(3), is a think tank whose mission is to develop and disseminate new ideas that foster greater economic choice and individual responsibility.

The Manhattan Institute