The authors point out that since the 1950s, growth in U.S. health care spending has typically been about 2% per year faster than growth in GDP, and that most economists trace this cost difference to the continual arrival of new and more expensive health care technologies. They write: " As we argue in this report, the U.S. health care system provides strong incentives for U.S. medical product innovators to invent high-cost products and provides relatively weak incentives to invent low-cost ones." The system also provides strong incentive to focus on drugs, devices, and health information technologies that will generate profits in high-income countries, not to find low-cost ways of addressing health problems in the rest of the world. Here are four of the examples they offer.
The cardiovascular “polypill” "refers to a multidrug combination pill intended to reduce blood pressure and cholesterol, known risk factors for the development of cardiovascular disease. The rationale is that combining four beneficial drugs in low doses in a single pill should produce an easy and affordable way to dramatically modify cardiovascular risk." But as the authors point out, even though a "polypill" only combines existing drugs, putting them in a single pill means that it would have to go through very expensive and length health and safety testing. The result would be a product that might be cheaper and more effective, but given that people could still take a handful of the other pills, the "polypill" would almost certainly be a low-profit product. Moreover, there have been several patents granted on aspects of a "polypill," so any company seeking to test such a pill would be likely to face a patent battle. No private company is likely to push this kind of innovation.
Better use of health information technology in patient records could save a lot of money in terms of lower paperwork costs, and also provide considerable health benefits by informing health care provides about past and current health experiences--for example, thus helping to minimize risks of allergic reactions or bad drug interactions. But despite various pushes and shoves, the health care sector has not been a leader in adopting and using information technology. Indeed, in many cases it seems to have soaked up the time of health care providers on one hand, while providing a tool for increasing the amount billed to insurance companies on the other hand.
The implantable cardioverter-defibrillator (ICD) is "an implantable device consisting of a small pulse generator (roughly half the size of a smartphone) and one or more thin wire leads threaded through large blood vessels into the heart. ICDs are designed to sense a life-threatening cardiac arrhythmia and automatically provide a dose of direct current (DC) electricity to jolt the patient’s heart back to normal." This technology works very well for some patients with heart disease, but not for others: specifically, it isn't recommended for "such as patients who are undergoing bypass surgery or in the early period following a heart attack, the first three months following coronary revascularization, severe heart failure (New York Heart Association Class IV), and those with newly diagnosed heart failure." Thus, this is a case of a positive and useful innovation that is quite likely overused--at substantial cost.
Prostate-specific antigen (PSA) is a test for whether men have prostate cancer. The authors write: "Despite PSA screening’s initial promise, multiple studies in the United States and in Europe have found that it does not reduce prostate cancer–specific mortality. Moreover, screening is associated with substantial harms caused by over-diagnosis and the complications that can occur from aggressive treatment. . . . Based on unfavorable findings, in 2012 the United States Preventive Services Task Force recommended against routine PSA screening for prostate cancer because the harms of screening outweigh the potential benefits. However, because federal law has not been changed, Medicare must still pay for the test’s use, as well as for the subsequent biopsies, surgical procedures, nonsurgical treatments, and complications that these procedures can cause."
The RAND authors point out a number of features of the U.S. health care system that can push innovation away from the methods that would most improve health and decrease costs. For example, the existing incentives for innovation don't tend to reward methods that will lead to reduced spending. As they note, in a market full of insured third-party payers, there is "[l]imited price sensitivity on the part of consumers and payers. In addition, a bias arises from the "limited time horizon of providers when they decide which medical products to use for which patients: In many instances, the health benefits from using a drug, device, or HIT are not realized until years in the future, at which time the patient is likely to be covered by a different insurer, such as Medicare. When this is the case, only the later insurer will obtain the financial benefits associated with the (long-delayed) health benefits." More broadly, "[m]any [health care] provider systems are siloed. When this is the case, most decisionmakers consider only the costs and benefits for their parts of their organizations, and few take into account savings that accrue outside of their silos."
They also write of "treatment creep" and the "medical arms race."
"Undesirable treatment creep often occurs when a medical product that provides substantial benefits to some patients is used for other patients for whom the health benefits are much smaller or completely absent. Treatment creep is encouraged by FFS [fee-for-service] payment arrangements, and it is enabled by lack of knowledge about which patients would truly benefit from which products. Treatment creep often involves using products for indications not approved by the FDA. Such “off-label” use—which delivers good value in some instances—is widespread and difficult to control. Treatment creep may reward developers with additional profits for inventing products whose use can be expanded to groups of patients who will benefit little. ..."
"The “medical arms race” refers to hospitals and other facilities competing for business by making themselves attractive to physicians, who may care more about using new high-tech services than they care about lower prices. ... Robotic surgery for prostate cancer and proton beam radiation therapy provide striking examples of undesirable treatment creep: Although there is little or no evidence that they are superior to traditional treatments, these high-cost technologies have been successfully marketed directly to patients, hospitals, and physicians. High market rewards for such expensive technologies encourage inventors and investors to develop more of them—regardless of how much they improve health."The authors have an eminently reasonable list of ways to alter the direction of health care innovation: basically, thinking through the sources of R&D funding, regulatory approval, and decision-making by third-party payers. For example, there could be public prize contests for certain innovations, or some patents that seem to offer substantial health benefits could be bought out and placed in the public domain, and third-party payers (including Medicare and Medicaid) could place more emphasis on being willing to buy new technologies that cut costs. But I confess that as I look over their list of policy recommendations, I'm not sure they suffice to overcome the incentives currently built into the U.S. healthcare system.