Redirecting Innovation in U.S. Health Care: Options to Decrease Spending and Increase Value

Redirecting Innovation in U.S. Health Care: Options to Decrease Spending and Increase Value

Redirecting Innovation in U.S. Health Care: Options to Decrease Spending and Increase Value

Redirecting Innovation in U.S. Health Care: Options to Decrease Spending and Increase Value

Synopsis

New medical technologies are a leading driver of U.S. health care spending. This report identifies promising policy options to change which medical technologies are created, with two related policy goals: (1) Reduce total health care spending with the smallest possible loss of health benefits, and (2) ensure that new medical products that increase spending are accompanied by health benefits that are worth the spending increases. The analysis synthesized information from peer-reviewed and other literature, a panel of technical advisors convened for the project, and 50 one-on-one expert interviews. The authors also conducted case studies of eight medical products. The following features of the U.S. health care environment tend to increase spending without also conferring major health benefits: lack of basic scientific knowledge about some disease processes, costs and risks of U.S. Food and Drug Administration (FDA) approval, limited rewards for medical products that could lower spending, treatment creep, and the medical arms race.

Excerpt

The United States spends more money on health care than any other nation. Many experts identify costly new technology as the biggest driver of health care spending. Previous studies aimed at reining in spending on technology have considered changing how existing medical technologies are used. In contrast, this study focused on changing which medical products get invented in the first place. The goals were to encourage creation of medical products that could improve health and reduce spending or that provide large enough health benefits to warrant any extra spending. The study argues that the most powerful way to accomplish these goals is to realign the financial incentives of inventors, investors, payers, providers, and patients by changing the costs, risks, and rewards anticipated at various stages along the pathway from invention of a medical product to its adoption in the U.S. market. The study suggests policy options that could point the way toward achieving that realignment.

The study should be of interest to health care industry experts, drug and device inventors, regulators, payers and insurers, venture capitalists, health policy experts, legislators, and researchers.

This work was supported by a grant from the Bill & Melinda Gates Foundation. The research was conducted in RAND Health, a division of the RAND Corporation. A profile of RAND Health, abstracts of its publications, and ordering information can be found at www.rand.org/health.

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