Will Healthcare Reform Stifle Technology Innovation?

At CIMIT's Innovation Grand Rounds yesterday, an audience member posed an intriguing question (paraphraphed as follows): "Since almost all the real health technology innovation we see is generated in the U.S., will our move toward a more European-style, single-payer system destroy our ability to innovate?".

Let's ignore, for the moment, that the question greatly overstates domestic hegemony in the innovation department; even as we ought to be aware of centers of health technology innovation developing and growing elsewhere around the world, it remains true that the U.S. continues to produce a disproportionate share of new diagnostics, therapeutics and healthcare management technologies. And let's not get sidetracked by the observation that we are today no closer to a single-payer system than we ever have been (you need only refer to congressional resistance to a publicly administered health insurance plan that would compete with private plans), or the fact that most European health care systems are moving toward diversification of payers, not unification. A real question remains: Will the reforms currently in the works weaken the ability of U.S. life sciences companies to develop and commercialize innovative technologies?

The CIMIT panelists (moderator Michael Greeley of Flybridge Capital Partners, Dr. Marsha Moses of Predictive Biosciences and Children's Hospital Boston, Dr. Elazar Edelman of the Harvard - MIT Health Sciences and Technology Program and Harvard Medical School, Dr. Joe Smith of Johnson & Johnson's Corporate Office of Science and Technology, and Zen Chu of Accelerated Medical Ventures), all viscerally entrepreneurial, thought not. The consensus: We'll continue to innovate - it's cutural, part of our national DNA; but there will be a turn toward innovations that generate cost-savings rather than enhanced capabilities regardless of cost. One panelist even opined that he wished that Medicare would just come out and formally adopt cost-effectiveness standards so that we could unambiguously get on with the job. And no one even flinched at the heresy.

I don't think our desire or our ability to innovate in the life sciences are at risk from any reforms that are likely to receive serious consideration in the current administration - and certainly not fom any current proposals. And I agree that there is likely to be a turn toward innovations that can lower the cost of high quality care - Christensen's disruptive innovations. But I also think it would be foolish to believe that our innovation rate cannot be affected by our healthcare reimbursement system - most particularly, by the ability of that system to allow returns to life sciences capital investments commensurate with that available to investments in other sectors. The entrepreneurial spirit needs to be fed.

I'm also impressed by the disjunction between the CIMIT panel's easy acceptance of the possibility of formal cost-effectiveness standards and the continued industry doubts about relatively benign initiatives toward Comparative Effectiveness Research. The ECRI Institute provides a rich compendium of background materials on CER, including a comprehensive catalogue of trade association and professional society position papers, for those who might be interested in digging deeply into the subject. An April 14 Wall Street journal report is characteristic: "A $1.1 billion infusion for research that compares the effectiveness of differing treatments raises thorny issues on how that research might be used, including the possibility of denying patient access to treatment options, according to some members of Congress and drug and medical-device companies." This despite the fact that it is very clear from multiple sources that current law forbids such use of CER, that current legislative proposals are all designed to reinforce rather than undermine the prohibition, and that testimony from administration officials, including a letter to concerned Senators from DHHS Secretary-designate Sibelius as reported in the Pink Sheet Daily on April 13, is consistent: no intent or desire to use CER to make national coverage policy.