The impact of science-intensive drugs on longevity and cure rate: Evidence from new prescription drugs launched in Japan

This paper examines how new science-intensive drugs improve the longevity of the population and the cure rate of hospitalized patients (inpatients). We develop a comprehensive longitudinal-disease-level panel data set, matched with drugs with a new molecular entity (NME) launched in Japan and classified by science intensity. Estimates suggest that the increase in the diversity of science-intensive NMEs (or NME stock) used for treating a disease significantly contributed to longevity and to the improvement of the cure rate of inpatients. In contrast, we find that non science-intensive NME stock does not significantly enhance these outcomes. Our results also suggest that controlling for the effects of surgeries does not reduce the effects of science-intensive drugs and that quality of science exploited for the discovery of an NME also plays a role in the effects. We have validated our indicator of science-intensive NMEs as a measure of the contribution of drugs to treatment, based on a survey of physicians. The results show that scientific advancement and exploitation for drug innovations critically contribute to improving human welfare.