Redirecting innovation in U.S. health care : options to decrease spending and increase value / Steven Garber [and six others].

Format:

Book

Author/Creator:

Garber, Steven, 1950- author.

Contributor:

RAND Health, issuing body.

Language:

English

Subjects (All):

Medical care, Cost of--United States.

Medical care, Cost of.

Medical technology.

Cost effectiveness.

Medical care--Technological innovations.

Medical care.

United States.

Medical care--Technological innovations--United States--Cost effectiveness.

Medical technology--United States--Cost effectiveness.

Drug approval--United States.

Drug approval.

Medicare.

Physical Description:

xxvii, 105 pages : color illustrations ; 26 cm

Other Title:

Redirecting innovation in United States health care

Place of Publication:

Santa Monica, CA : Rand Corporation, [2014]

Summary:

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. The authors identified ten policy options that would help advance the two policy goals. Five would do so by reducing the costs and/or risks of invention and obtaining FDA approval: (1) Enable more creativity in funding basic science, (2) offer prizes for inventions, (3) buy out patents, (4) establish a public-interest investment fund, and (5) expedite FDA reviews and approvals. The other five options would do so by increasing market rewards for products: (1) Reform Medicare payment policies, (2) reform Medicare coverage policies, (3) coordinate FDA approval and Centers for Medicare & Medicaid Services coverage processes, (4) increase demand for technologies that decrease spending, and (5) produce more and more-timely technology assessments. Book jacket.

Contents:

Chapter 1 Introduction 1

Project Goals 3

What Determines Value for Health Care Products? 4

Chapter 2 The Context for Medical Product Innovation 7

Three Stages of Innovation 7

Primary Actors in Inventing Medical Products 9

Drug and Device Companies 9

HIT Companies 11

Goals of Medical Product Inventors 11

Private Investors 11

Financial Incentives of Medical Product Inventors 12

Influencers of Medical Product Invention 13

National Institutes of Health 14

U.S. Food and Drug Administration 14

U.S. Patent and Trademark Office 15

Office of the National Coordinator for Health Information Techno logy 15

Primary Actor and Influencers in Approval of Medical Technologies 15

Primary Actors in Adoption of Medical Products 16

Physicians 16

Hospitals 17

Influencers of Providers 18

Summary: Context for Medical Product Innovation 20

Chapter 3 Methods 21

Literature Reviews 21

Technical Expert Panel 22

Expert Interviews 24

Case Studies 25

Policy Options 27

Chapter 4 Analysis 29

Lack of Basic Scientific Knowledge 30

Lack of an Adequate Knowledge Base Can Hinder Product Inventors 30

Sources of Financial Support for Increasing Basic Scientific Knowledge 31

Federal Funding Is Critical to Expanding the Basic Scientific Base 31

Case Study Summary. Haemophilus influenzae Type b (Hib) Vaccine 32

How Scientific Uncertainty Affects Medical Produce Invention 34

Costs and Risks of FDA Approval 34

Could the FDA Ensure Safety with Quicker and Less Costly Processes? 34

Delays Entail Both Health and Financial Costs 35

Case Study Summary: A Cardiovascular Polypill 35

Unpredictability and Ineffective Communication Complicate the Approval Process 37

FDA Caution May Be a Root Cause of Regulatory Delay 38

Case Study Summary: Avastin for Metastatic Breast Cancer 39

Regulatory Risk Figures Prominently in Investment and Invention Decisions 41

Flow Regulators Uncertainty Affects Investment and Invention 41

Limited Rewards for Medical Products That Could Lower Spending 42

Many Patients and Providers Are Fairly Insensitive to Prices 43

Generous Health Insurance Tends to Reduce Consumers' Sensitivity to Price 43

Fee-for-Service Payment Also Tends to Reduce Price Sensitivity 45

Lack of Price Transparency Also Reduces Price Sensitivity 45

Medicare Is Not Allowed to Consider Costs in Coverage and Reimbursement Decisions 45

Limited Time Elorizons and Fragmented Decisionmaking 46

Case Study Summary: Electronic Health Records 47

Inadequate Rewards for Products That Decrease Spending 51

Implications for Inventors and Investors 51

Treatment Creep 52

Case Study Summary: Implantable Cardioverter-Defibrillator 52

Manufacturers Can Promote Low-Value Use 55

Case Study Summary: Prostate-Specific Antigen 56

Defensive Medicine Is a Form of Treatment Creep 58

Off-Label Use of Medical Products Is Widespread, but Health Effects Are Unknown 58

It Is Difficult to Control Undesirable Instances of Off-Label Use 58

Treatment Creep Can Substantially Affect Incentives for innovators 60

Medical Arms Race 60

The Classical Medical Arms Race 60

The New Medical Arms Race 61

Expensive and Controversial Medical Equipment Remains Prominent 61

Case Study Summary: Robotic Surgery 62

What Drives the Medical Arms Race? 64

The Medical Arms Race Can Substantially Affect Incentives of Inventors 64

Chapter 5 Policy Options to Improve the U.S. Medical Product Innovation System 65

Options to Reduce Costs and Risks of Invention and Approval 67

Enable More Creativity in Funding Basic Science 67

Offer Prizes for Inventions 68

Buy Out Selected Patents 69

Establish a Public-Interest Investment Fund 70

Expedite FDA Reviews and Approvals for Products That Decrease Spending 70

Implementation Challenges 71

Options to Increase Market Rewards 71

Reform Medicare Payment Policies 72

Reform Medicare Coverage Policies 73

Coordinate FDA Approval and CMS Coverage Processes 74

Increase Demand for Products That Could Decrease Spending 75

Produce More and More-Timely Technology Assessments 76

Case Study Summary: Telemedicine 76

Summary 79

Chapter 6 In Conclusion 81.

Notes:

Includes bibliographical references (pages 91-105).

"RR-308"--Page [4] of cover.

ISBN:

0833085468

9780833085467

OCLC:

878024393