The Economics of Innovation: Frank Lichtenberg, Professor Columbia Business School

November 11, 2021 | by Julia Masselos

Frank Lichtenberg is a professor at the Columbia Business School, looking at the impact of medical innovation not only on the wealthiest countries, but also the lowest resourced 1 billion people in the world.

What Kind of Impact Can Medical Innovation Have Around the World?

Frank: Recently, I published a paper looking at longevity growth in 39 countries, including low-, middle-, and high-income countries. In other words, how people’s life spans in 39 countries changed over time.

By focusing on innovations in pharmaceuticals, I found that in the countries with greater access to new drugs, there are also greater improvements in longevity. Interestingly, it isn’t only at the country level that we see benefits of access to medical innovation. When we look at specific diseases, there is a strong correlation between new drugs available and longevity for people suffering from those specific diseases.

In general, economists recognize the importance of health and longevity growth on economic growth. In fact, there are some economists who even argue that the growth in longevity we witnessed in the 20th century was as valuable as the growth in GDP per capita accrued over the same period.

Another area of research I recently undertook was looking at how changes in the national list of essential medicines (NLEM) in Thailand affected mortality rates. The NLEM is a list of medications the government deems essential, and so will provide them to their population at no cost. My findings showed that as more drugs for a specific disease were added to the NLEM, mortality rates from that disease declined. Perhaps most impressively, I estimated that in 2015 alone, 650,000 Thai people over the age of 75 gained a year of life as a direct result of the medications added to the NLEM in the prior decade, from 2005 – 2015.

This shows the importance of diffusion pharmaceutical innovation throughout populations – we can make meaningful impact at the tech level but this doesn’t mean much if policy doesn’t support its diffusion to people who need it most.

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