Medical Innovation and the American Economy
While many are concerned about the effect of new drugs, devices, procedures and equipment on overall medical spending and costs, and innovative products and services do appear to be a substantial contributor to cost increases, the companies creating these innovations generate well-paying jobs that are important to the overall economy. A new report finds that medical innovation is in jeopardy in the United States and that may hamper economic group at a time when the economy is fragile. (Innovation Report)
The report initially notes that the United States became the leader in medical innovation-biotech, genomics and medical devices–through synergistic public and private actions which funded research, helped develop the necessary human resources and created a regulatory and reimbursement environment amenable to new products. Now the focus is often on the adverse effects of new products as well as their cost, and the recession has limited private venture funding, especially for early stage companies.
The report suggests that the FDA in particular needs to put more speed and certainty into its review processes. There is a growing gap in the number of trained scientists available to meet research and development demands. New tax and reimbursement measures may limit the desirability of health care as an investment area. The report provides a number of specific recommendations for maintaining vigorous medical innovation in the United States.
The report nicely illustrates the tension between the economic benefits of the medical product industry and its costs to the overall health system. Trying to balance those is not an easy task. Medical costs impose a heavy competitive burden on non-health companies and if those costs were lower we might see more growth in those industries. On the other hand, the medical industry tends to be particularly clean and to have much higher than average payrolls. The current mindset does seem to be to discourage introduction of new products as a method of controlling costs, but that may backfire not only economically, but in terms of cost control. Some of these new innovations may actually lead to cures of chronic diseases, causing overall significant spending reductions.