Medical Innovation in Peril

The creation of a robust biopharmaceutical and medical device industry is one of modern America’s most noteworthy economic and technical achievements. Over the last several decades, advances in diagnostic tests, minimally invasive medical devices, biologics, and small-molecule drugs have improved survival and reduced the physical burdens of a host of maladies. America has led the way in new drug launches and in the development and availability of new devices for safer diagnosis and treatment, to the benefit of patients worldwide. The most visible illustration of these triumphs can be seen in diseases that have benefited from the successive launch of incrementally more effective drugs. Take as an example the treatment of cancer. The overall five-year survival rate for invasive cancers has risen from around 51 percent to almost 70 percent during the last twenty years—the result of better drugs being coupled to earlier detection and better treatment protocols. Today, people diagnosed with many early stage cancers cannot only hope for a cure, but should expect one. The overall five-year cancer-free survival rate for early colon cancer is better than 90 percent. Similarly, treatment options for breast cancer have improved overall five-year cancer-free survival to better than 85 percent. Comparable results hold for lymphoma, myeloid leukemia, and other diseases. New medical products aren’t the only factor in these gains. But there’s no debating that innovative new drugs are having a meaningful impact on these, and many other diseases.

The new health care law specifically targets reimbursement for new drugs and devices as a way to save money in programs like Medicare and Medicaid. These savings, in turn, are used to pay for new health coverage for the uninsured. But the legislation doesn’t take down drug and medical device prices directly. Rather, it creates a series of new agencies, boards, and authorities that separately will be empowered to construct new rules to impact how medical products are priced, as well as to restrict their use by defining when and if products are covered by insurance. As this new landscape unfolds over the course of many years, it promises to breed protracted uncertainty about which new medicines or devices will qualify for coverage inside an expanding government-dominated public health sector. These policy steps, and the uncertainty they generate, will inevitably weigh on entrepreneurship, investment, and innovation. . . .

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Scott Gottlieb, M.D., is a resident fellow at AEI.

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