Has Pharmaceutical Innovation Reduced Social Security Disability Growth?

Frank Lichtenberg

International Journal of the Economics of Business, 2011, vol. 18, issue 2, 293-316

Abstract: This paper analyzes longitudinal state-level data during the period 1995-2004 to investigate whether use of newer prescription drugs has reduced the ratio of the number of workers receiving Social Security Disability Insurance benefits to the working-age population (the "DI recipiency rate"). All of the estimates indicate that there is a significant inverse relationship between disability recipiency and a good indicator of pharmaceutical innovation use: the mean vintage (FDA approval year) of Medicaid prescriptions. From 1995 to 2004, the actual disability rate increased 30%, from 2.62% to 3.42%. The estimates imply that in the absence of any post-1995 increase in drug vintage, the increase in the disability rate would have been 30% larger: the disability rate would have increased 39%, from 2.62% to 3.65%. This means that in the absence of any post-1995 increase in drug vintage, about 418,000 more working-age Americans would have been DI recipients.

Keywords: Pharmaceutical; Innovation; Disability Social Security (search for similar items in EconPapers)
Date: 2011
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DOI: 10.1080/13571516.2011.584432

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