Drugs developed decades ago reduced Canadian mortality rates 49 percent - saving 847,000 life-years by 2022, and reduced hospital utilization by 55 percent - avoiding potential healthcare costs of $78.7 billion in 2022 alone

Lichtenberg study reveals virtuous legacy of pharmaceutical innovation: Canadian Health Policy Institute

TORONTO, Aug. 11, 2025 /CNW/ - New research from the world's leading pharmaceutical economist affirms that Canadians continue to receive significant windfall gains from global pharmaceutical innovation that occurred decades ago.

Columbia University Professor and affiliate of the U.S. National Bureau of Economic Research, Frank R Lichtenberg , PhD, examined whether the new drugs that were approved by government regulators in earlier years had any impact on Canadian mortality rates or use of hospital services in later years.

Using publicly available data spanning from 1970 to 2022, Lichtenberg estimated that if those innovative medicines had not been available in Canada, the number of life-years lost before age 75 would have been 49 percent higher by 2022. Pharmaceutical innovation that occurred in the earlier years saved 847 thousand Canadian life-years.

In a separate analysis of hospital utilization, he estimated that without access to the new drugs that were released during 1970-1991, the total number of hospital days used by Canadians would have been 55 percent higher in 2022. Total national spending on hospitals in 2022 was CA$143 billion – almost all of it paid by governments, so lower utilization avoided significant costs for taxpayers.

Lichtenberg explained the cost implications, "Pharmaceutical innovation occurring in earlier years saved 14.2 million hospital days that otherwise would have been used. The estimated reduction in 2022 hospital expenditure attributable to drug innovation during 1970-1991 was CA$78.7 billion – twice as large as 2022 national expenditure on all prescribed medicines and related supply chain costs totaling CA$37.4 billion."

The data also revealed that new classes of drugs had a more immediate effect on mortality than new drugs, but the former effect was smaller and less statistically significant than the latter effect. For example, new classes of drugs authorized during 1990-2011 were estimated to have reduced the growth in the number of years of life lost before age 65 – 29 percent by 2022, while the corresponding estimate for new drugs authorized during 1978-1999 was 39 percent.

The study further found that the age-adjusted mortality rate from a disease in a province and year was statistically significantly inversely related to the number of drugs used to treat the disease that were covered on public drug program formularies in that province 4-12 years earlier.

The study was funded by Innovative Medicines Canada, the national industry association of research based pharmaceutical companies. It was published in Canadian Health Policy, the free access journal of the Canadian Health Policy Institute (CHPI) a non-governmental think tank.

Brett J Skinner, founder and CEO of the Institute and Editor of the journal said, "Lichtenberg's study is empirical evidence of a virtuous legacy from past investments in the research and development of new medicines." 

The study is available at www.canadianhealthpolicy.com – Lichtenberg, F. R. (2025). The impact of pharmaceutical innovation on mortality and hospital utilization in Canada, 2000–2022. Canadian Health Policy, AUG 2025.

Media Contact: Frank R Lichtenberg, PhD, Columbia University, National Bureau of Economic Research, and CESifo. [email protected]. Columbia University, Kravis Hall 522, 665 West 130th Street, New York, NY 10027.

CONTACT CHPI: Brett J Skinner, PhD, CEO [email protected].

SOURCE Canadian Health Policy Institute