Innovation and Technology Adoption in Health Care Markets

  • Title:

    Innovation and Technology Adoption in Health Care Markets
  • Format:

    Paperback
  • Paperback Price:

    15.00
  • Paperback ISBN:

    978-0-8447-4268-7
  • Paperback Dimensions:

    5.5'' x 8.5''
  • 113 Paperback pages
  • Buy the Book

The twentieth century brought tremendous advances in health care technology, from antibiotics to laparoscopic surgery to targeted therapies for cancer--but these gains have been expensive. Governments are struggling to control burgeoning expenditures without compromising the quality of health care. Increasingly, these efforts have relied on "cost-effectiveness analysis" that balances costs against patient benefits to determine which treatments will qualify for reimbursement.

Is the use of cost-effectiveness analysis to guide technology adoption wise? Although reimbursement criteria may satisfy government health budgets today, they threaten to stifle the innovation that will generate new breakthroughs in health care technologies tomorrow. Such criteria benefit current patients by lowering the cost of health care in the short term, but they also hurt future patients by limiting producers' incentives for further medical innovation. Developers of drugs to treat HIV/AIDS, for example, earn lifetime profits equal to only 5 percent of the estimated $1.4 trillion social value of their treatments. How can policymakers reward innovators adequately--and thereby secure the welfare of future patients--while ensuring that current patients have access to much-needed new treatments?

In Innovation and Technology Adoption in Health Care Markets, Anupam B. Jena and Tomas J. Philipson argue that further use of cost-effectiveness analysis to curb health care spending may do more harm than good. Governments should adopt a more inclusive view of cost-effectiveness, one that reflects not only the short-term costs to patients but also the long-term effect on medical innovation. Policymakers should provide sufficient incentives for companies to develop new health care technologies--or risk a dangerous shortage of life-saving drugs in the future.

Anupam B. Jena, Ph.D., is a visiting fellow at the Bing Center for Health Economics at the RAND Corporation and a fellow in the Medical Scientist Training Program at the University of Chicago.

Tomas J. Philipson, Ph.D., is a visiting scholar at AEI and the Daniel Levin Professor at the University of Chicago’s Irving B. Harris Graduate School of Public Policy.

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About the Author

 

Tomas J.
Philipson
  • Tomas J. Philipson is a visiting scholar at AEI and the Daniel Levin Chair in the Irving B. Harris Graduate School of Public Policy as well as an associate member of the department of economics at the University of Chicago. He was a senior health care adviser to the 2008 presidential campaign of John McCain and served in the Bush administration as the senior economic adviser to the commissioner of the Food and Drug Administration from 2003 to 2004 and subsequently as the senior economic adviser to the administrator of the Centers for Medicare & Medicaid Services from 2004 to 2005. Mr. Philipson is an editor of Forum for Health Economics & Policy and is on the editorial board of Health Economics and The European Journal of Health Economics. He has twice been the recipient of the highest honor of his field, the Kenneth Arrow Award from the International Health Economics Association, in 2000 and 2006.  Mr. Philipson is the cofounder of Precision Health Economics, is an adviser to the Gerson Lehrman Group, and is a consultant for Compass-Lexecon and Analysis Group.
  • Email: t-philipson@uchicago.edu

 

Anupam B.
Jena
  • Anupam B. Jena, M.D., Ph.D. is an assistant professor of health care policy and medicine at Harvard Medical School and an assistant physician in the Department of Medicine at Massachusetts General Hospital, where he practices general inpatient medicine and teaches medical residents.


    Dr. Jena's research involves several areas of health economics and policy including medical malpractice, the economics of medical innovation and cost-effectiveness, geographic variation in medical care, and insurance benefit design. Using unique data from a nationwide professional liability insurer, Dr. Jena's work on malpractice has provided new estimates of medical malpractice risk according to physician specialty, the costs of defending malpractice claims, and outcomes of malpractice claims undergoing litigation.

  • Email: jena@hcp.med.harvard.edu

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