Innovation in prescription drugs is helping improve Americans' overall health, according to a Manhattan Institute report by Columbia University health economist Frank Lichtenberg.

States where newer drugs were adopted more quickly had smaller increases in disability rates, the study found.

Many Americans are living longer thanks to medical innovations such as heart bypass surgery and antiviral drug "cocktails" for HIV-infected patients, the report notes.

To date, however, little research has been done regarding whether these innovations have helped Americans avoid the potential for severe disability that often accompanies chronic illness and aging. The answer, Lichtenberg says, would have serious potential consequences for our nation's economy and for safety-net programs such as Medicare.

Increases in Disability, Obesity

That's because America as a society is getting much older—and heavier, as Lichtenberg’s report notes. By 2030, about one in five Americans will be 65 or older. At the same time, rapid increases in U.S. obesity rates portend a similar increase in associated chronic diseases such as diabetes and heart disease.

Meanwhile, rising numbers of Americans have been classified as disabled. Between 1995 and 2004, Americans receiving disability benefits under two federal programs—Social Security Disability Insurance and Social Security Income—rose 30 percent.

In his study, set to be released in early 2009, Lichtenberg examined patterns in prescription drug utilization in 49 of the 50 states between 1995 and 2004. He used data on Medicaid prescriptions for 30 therapeutic groups, which account for virtually all Medicaid medicines dispensed.

The data include the drug name and the year in which the U.S. Food and Drug Administration approved its active ingredient—what the report calls the drug's "vintage." For instance, Zocor's vintage is 1991, the year its active ingredient, Simvastatin, won FDA approval.

Lichtenberg concludes an important factor in the size of a given state’s disability rolls is its average drug "vintage"—how long ago the active ingredients of drugs used by its residents received FDA approval.

Quicker Approval, Less Disability

The study found states in which the difference between average vintage of Medicaid prescriptions in 1995 and average vintage in 2004 was the largest—meaning where newer drugs were adopted more quickly—had the smallest increases in disability rates.

For instance, in California, Connecticut, Idaho, Maryland, and Rhode Island—the five states where the difference between average vintage in 1995 and average vintage in 2004 was largest—the number of disability recipients per 100,000 working-age people increased by 800.

In Alabama, Louisiana, Oklahoma, Texas, and West Virginia—the five states in which the difference between average vintage in 1995 and average vintage in 2004 was smallest—the number of disability recipients per 100,000 working-age people increased by 1,400, a rate of increase 75 percent greater than in the first five states. The study controlled for behavior-related risk factors such as obesity and smoking as well as education, wage rates, and changes in average age.

Without these gains in drug vintage since 1995, the rate of increase at which working-age people were classified as disabled would have been 30 percent higher, the study found, resulting in 418,000 additional people receiving disability payments in 2004. Social Security benefits paid to this population would have amounted to an additional $4.5 billion.