The Value of Medical Innovation in the Fight Against COVID-19 in the United States

A longstanding economic literature argues that the total welfare loss of a disease comes not only from the direct effects of the disease itself, but also the costs of preventing the disease. This paper assesses how new medical innovations for COVID-19—specifically vaccines and therapeutics—reduced both types of losses. These rapidly developed medications and vaccines yielded enormous value in the US and abroad and are likely among the most important innovations in recent history. We find that in their first year of widespread use, these innovations saved at least 699,110 life years in the US, conferring a direct economic benefit of around $371.6 billion. In addition, the reduction in mitigation strategies to avoid COVID-19 infections (e.g., lockdowns, quarantine measures, social distancing) that resulted from the availability of vaccines and therapeutics led to a value of $933.1 billion in increased economic activity in the U.S. Thus, while these innovations had a tremendous impact on population health, an even greater amount of value resulted from enabling the return of economic activities through the lessening of efforts to prevent infection.