Medical innovation was barely mentioned in a year of discussion on health care reform. This is like discussing food without mentioning nutrition. Much of the value of medicine stems from medical innovation. Basic care can provide protection against everyday infections, injuries and procedures like delivering babies. The significant gains in life expectation today require more specialized care like heart or cancer treatment or cures for genetic illnesses. Will socialized medicine maintain America’s leading role in medical innovation?
Killing the Golden Goose
In a recent study released by the Cato Institute in November 2009, “Bending the Productivity Curve: Why America Leads the World in Medical Innovation,” the authors, Glen Whitman and Raymond Raad, crunch the numbers on medical innovation in America and find that it accounts for most of achievements in medical innovation.
The U.S.A’s preeminence in research is indicated by its lead in the funding of medical research and the Nobel Prizes earned. The National Institutes of Health alone spend $30 billion in annual research compared to $4 billion in all of Europe. The detractors will very likely respond by saying that NIH is a government institution. The reality is much of the basic research is done in Universities, often large private Universities like Stanford, Harvard and Northwestern, and the commercialization is completed in private companies. The NIH only funds the research.
According to the CATO study, of the 95 recipients of Nobel Prices in the past 40 years, 57 (60 percent) were from the United States, while 40 (42 percent) were from the European Union countries, Switzerland, Canada, Japan, or Australia—countries whose combined population is more than double that of the United States.
Comparing the Quality of Innovation
Innovation may not necessarily make a great deal of difference to the quality of life of patients. The authors have, therefore, singled out the innovations that have had a lasting influence on the quality of medical care. This was done based on feedback from 225 leading primary physicians.
Of the 27 innovations in therapeutics and diagnostics and for which a country could be identified, work performed in the United States significantly contributed to the invention or advancement of 20, including nine of the top 10. As for drugs, sixteen of the twenty nine representative drug classes were developed in the United States, while 15 were developed in the EU or Switzerland. The lower rate of innovation in Europe has a lot to do with the monopsony buying power of government buyers. The compensation for prescription drugs, for example, is 35 to 55 percent lower in Europe compared to the USA.
In the USA, lower compensation of innovative therapies by Medicare has discouraged the adoption of implantable defibrillators. This is a clear case of penny wise and pound foolish policy. The loss of health benefits from new innovation is far more than the dollar value of lower compensation.
Costs can be lowered in more creative ways, such as by using medical devices, to substitute for more expensive specialized care. Ultra-sound equipment can be used by primary physicians to detect heart disease. This will hardly be possible if compensation for primary physicians is lowered.
The American biotechnology industry is poised to churn out a great deal more innovative drugs that will, for example, cure genetic disorders which can disable humans for life. An entirely new generation of personalized medicine is possible with medical informatics which enable therapies suitable for the specific genetic composition of individuals.
Much has been said of higher rates of infant mortality in the USA compared to Europe. This is another example of facetious analysis which leads to completely misleading conclusions. According to Gregory Dattilo, co-author of “Your Health Matters”, the reality is that the USA has used technology to reduce the mortality of pre-maturely born babies. By contrast, European countries has allowed them to be aborted because it does not consider the cost of saving them worthwhile. If mortality of pre-maturely babies is taken into account, Europe will in all probability end up with higher rate of infant mortality.