Empirical Evidence on the Value of Pharmaceuticals

Craig Garthwaite*, Mark Duggan

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingChapter

4 Scopus citations


This article begins by summarizing the existing evidence concerning the effect of pharmaceuticals on overall health. It then examines evidence of the health benefits of pharmaceuticals for the most commonly used treatments for widespread chronic and life-threatening conditions. It focuses on the most widespread conditions and those for which the utilization of prescription medication has changed the most dramatically over the last two decades. A broader question about the total value of pharmaceuticals involves the net benefit of these medications. There is a growing debate in the literature specifically about whether new drugs are worth more than their costs. The largest debate focuses on whether spending on these new drugs leads to even larger decreases in nonprescription drug spending whether the new drugs are cost-effective (i.e., providing enough health benefits to outweigh their costs relative to an alternative treatment method), or neither. The article considers existing evidence on the net benefits of these medications in terms of cost savings from nondrug health spending. Finally, it discusses the growing body of literature focusing on the nonhealth benefits of pharmaceuticals.

Original languageEnglish (US)
Title of host publicationThe Oxford Handbook of the Economics of the Biopharmaceutical Industry
PublisherOxford University Press
ISBN (Electronic)9780199968749
ISBN (Print)9780199742998
StatePublished - Sep 18 2012


  • Health benefits
  • Health effects
  • New drugs
  • Nonhealth benefits
  • Prescription drugs

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)


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