Americans responsible for majority of healthcare innovations

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athelas
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Americans responsible for majority of healthcare innovations

Postby athelas » Mon Aug 03, 2009 3:26 am UTC

This caught my eye:
The top five U.S. hospitals conduct more clinical trials than all the hospitals in any other developed country. Since the mid- 1970s, the Nobel Prize in medicine or physiology has gone to U.S. residents more often than recipients from all other countries combined. In only five of the past thirty-four years did a scientist living in the United States not win or share in the prize. Most important recent medical innovations were developed in the United States.
It is known that many national healthcare systems are able to save money because of their monopsonistic market powers, which by definition bidd down price and reduce the quantity healthcare from what a competitive market would suggest. One consequence of this is less innovation: if you have fewer profits, you have less to reinvest in research and development. Since information diffuses freely, that implies that the US, through its higher healthcare costs, is subsidizing much of the innovation that the EU benefits from.

If you disagree, how do you account for the differential in innovation between the two areas, when the EU has a greater population and GDP than the United States? If you agree, then the US going to a monopsonistic single-payer system would decrease the rate of global healthcare innovation (companies may raise prices overseas and get some revenue back, but not enough to compensate for the losses.) Where, then, does the utilitarian calculus stand?

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Re: Americans responsible for the majority of healthcare innovat

Postby Vaniver » Mon Aug 03, 2009 3:48 am UTC

It's nice to see more numbers falling in behind this view.

I will point out that the EU's larger GDP and far larger population actually result in a lower GDP per capita- by about 30%, the last time I looked at the numbers. But given that American dominance in other Nobel prizes is not as great (I believe), it seems clear that the difference in per capita income isn't as significant as other factors.


I will point out that it's not necessary for Americans to be doing the healthcare innovation for further regulation or price controls in the US to do damage to global healthcare innovation- as non-American pharmaceutical companies can sell non-American innovations in America and subsidize their non-American markets the same way American firms can. But it makes sense- having your R&D where your largest market is has benefits.
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Re: Americans responsible for the majority of healthcare innovat

Postby Lucrece » Mon Aug 03, 2009 4:46 am UTC

What good are the innovations if they're only going to a fraction of your people?
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Re: Americans responsible for the majority of healthcare innovat

Postby Brooklynxman » Mon Aug 03, 2009 4:48 am UTC

Lucrece wrote:What good are the innovations if they're only going to a fraction of your people?

Better some then none
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Re: Americans responsible for the majority of healthcare innovat

Postby Vaniver » Mon Aug 03, 2009 4:49 am UTC

Lucrece wrote:What good are the innovations if they're only going to a fraction of your people?
What good are cars, when only the richest can afford this innovation in transportation? --1905

The rest of the points in the link are salient- though non-Americans rate their health care system higher than Americans do, they rate the health care they actually receive worse than Americans do.
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Re: Americans responsible for the majority of healthcare innovat

Postby Lucrece » Mon Aug 03, 2009 5:20 am UTC

Vaniver wrote:
Lucrece wrote:What good are the innovations if they're only going to a fraction of your people?
What good are cars, when only the richest can afford this innovation in transportation? --1905

The rest of the points in the link are salient- though non-Americans rate their health care system higher than Americans do, they rate the health care they actually receive worse than Americans do.


The issue here is the rate of innovation. Do we as a society mind slower rates in order to help the people who cannot afford insurance or die because they're afraid of going to the hospital and incurring debt? There's a difference between health and commodity (cars). Unless you interpret health as a commodity.
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Re: Americans responsible for the majority of healthcare innovat

Postby Marquee Moon » Mon Aug 03, 2009 7:34 am UTC

Lucrece wrote:
Vaniver wrote:
Lucrece wrote:What good are the innovations if they're only going to a fraction of your people?
What good are cars, when only the richest can afford this innovation in transportation? --1905

The rest of the points in the link are salient- though non-Americans rate their health care system higher than Americans do, they rate the health care they actually receive worse than Americans do.


The issue here is the rate of innovation. Do we as a society mind slower rates in order to help the people who cannot afford insurance or die because they're afraid of going to the hospital and incurring debt? There's a difference between health and commodity (cars). Unless you interpret health as a commodity.

Even if health care isn't a commodity/service (whatever that means), how is that relevant? I think the point Vaniver made is that in the short run innovation can benefit only the wealthy, but that in the long run innovation can have a major positive impact on the lives of people in all income groups. If this is true for pistons and petrol, why isn't it true for blood cells and veins, even if one is a 'commodity' and the other is a 'human right'? What effect will halting medical innovation today have on mainstream health care in 20 or 30 years time?

Anyway, I'm sure there's a happy medium where we can protect low income people from huge medical expenses and still reward health car innovation.

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Re: Americans responsible for the majority of healthcare innovat

Postby General_Norris » Mon Aug 03, 2009 8:51 am UTC

The link you posted is vague and quite biased. Also some points are quite bad like "People in countries with more government control of health care are highly dissatisfied and believe reform is needed". Well the Madrid metro is fantastic and people still complain. That doesn't matter.

Their "proof" for "Americans are responsible for the vast majority of all health care innovations" is that there are more clinical trials which is related but doesn't mean all innovation is that. And the Nobel Prize seems a poor indicator to me.

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Re: Americans responsible for the majority of healthcare innovat

Postby Lucrece » Mon Aug 03, 2009 3:02 pm UTC

Marquee Moon wrote:
Lucrece wrote:
Vaniver wrote:
Lucrece wrote:What good are the innovations if they're only going to a fraction of your people?
What good are cars, when only the richest can afford this innovation in transportation? --1905

The rest of the points in the link are salient- though non-Americans rate their health care system higher than Americans do, they rate the health care they actually receive worse than Americans do.


The issue here is the rate of innovation. Do we as a society mind slower rates in order to help the people who cannot afford insurance or die because they're afraid of going to the hospital and incurring debt? There's a difference between health and commodity (cars). Unless you interpret health as a commodity.

Even if health care isn't a commodity/service (whatever that means), how is that relevant? I think the point Vaniver made is that in the short run innovation can benefit only the wealthy, but that in the long run innovation can have a major positive impact on the lives of people in all income groups. If this is true for pistons and petrol, why isn't it true for blood cells and veins, even if one is a 'commodity' and the other is a 'human right'? What effect will halting medical innovation today have on mainstream health care in 20 or 30 years time?

Anyway, I'm sure there's a happy medium where we can protect low income people from huge medical expenses and still reward health car innovation.


But there's no halting, just a slowdown in the money that goes in for them, meaning the projects will take longer to take place, or they will have to seek other sources of income.
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Re: Americans responsible for majority of healthcare innovations

Postby Iv » Mon Aug 03, 2009 4:48 pm UTC

I'm not sure I agree or disagree with the OP, but here are some elements.
athelas wrote:If you disagree, how do you account for the differential in innovation between the two areas, when the EU has a greater population and GDP than the United States?
In EU, as healthcare is better covered, people tend to go to the doctor more often, this leads to more need for doctor cabinets, this makes opening a cabinet more interesting for a doctor than a R&D position.

I would also suspect that EU R&D suffers from the lack of a common language. Shockingly, European R&D too often happen in local language. I guess that in medical R&D, given the huge specialized vocabulary used, it makes matters worse.

athelas wrote:If you agree, then the US going to a monopsonistic single-payer system would decrease the rate of global healthcare innovation (companies may raise prices overseas and get some revenue back, but not enough to compensate for the losses.) Where, then, does the utilitarian calculus stand?

I am not a US citizen so I have followed this debate with a more distant point of view and maybe I am missing some points, but here is what I understood :
- One part of the excessive costs of US healthcare comes from bad organization from actors. In fact it is a feature of the competitive market having only short-term profit in mind : it has no incentive to use standards. This excess is what the current reforms are trying to fix.
- The R&D is financed by pharmaceutical firms through the sales of medicine. This is where the R&D money comes from, I don't see how making the state manage the reimbursement instead of private companies would result in lower incomes for these companies.

The "let's ill people finance medical science" vs the "medical science funding is a global effort" debate is an important one. The threat of Brazil's government to seize patents of AIDS therapy as a measure of national interest made me think about it quite a bit. I think that diseases are the most evident form of injustice. Saying that one must pay because he accidentally got a virus seems totally unfair. I understand how the current system keeps R&D money flowing (it is basically making people pay the right to stay alive) I think however that it is a worthy goal to try making it more ethical while insisting on the value of R&D. I think the guy you elected made strong arguments for both of these things.

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Re: Americans responsible for majority of healthcare innovations

Postby Vaniver » Tue Aug 04, 2009 12:20 am UTC

Iv wrote:One part of the excessive costs of US healthcare comes from bad organization from actors. In fact it is a feature of the competitive market having only short-term profit in mind : it has no incentive to use standards. This excess is what the current reforms are trying to fix.
The primary place this shows up is redundant tests- one doctor orders a scan in the morning, and another doctor orders a scan in the afternoon rather than go through the hassle of getting the information from the first doctor (and may not know about the first scan). That's a comparably small part of the problem.

The more significant part of the problem comes in when doctors profit from doing diagnostic procedures (and lose when they don't do diagnostic procedures), which are the consequences of doctors owning parts of the health care process and excessive malpractice liability. A significant number of procedures are picked to make the doctor money, or to defend the doctor against a malpractice suit.

Iv wrote:The R&D is financed by pharmaceutical firms through the sales of medicine. This is where the R&D money comes from, I don't see how making the state manage the reimbursement instead of private companies would result in lower incomes for these companies.
The primary benefit is that different pharmaceutical companies can try different models of funding R&D, and can have different targets. More successful models will get more funding, leading to a more efficient funding process on the whole- as compared to a unified funding model.

As well, the funding decisions are made by interested investors, rather than politicians- which generally means more total funding. Convincing the government to put up a sizeable pot of money to make money is very different from doing the same to investors- and the government will often fund things like NCCAM rather than profitable outfits.

Iv wrote:The "let's ill people finance medical science" vs the "medical science funding is a global effort" debate is an important one. The threat of Brazil's government to seize patents of AIDS therapy as a measure of national interest made me think about it quite a bit. I think that diseases are the most evident form of injustice. Saying that one must pay because he accidentally got a virus seems totally unfair. I understand how the current system keeps R&D money flowing (it is basically making people pay the right to stay alive) I think however that it is a worthy goal to try making it more ethical while insisting on the value of R&D. I think the guy you elected made strong arguments for both of these things.
The problem with Brazil's approach is that it produce a massive disincentive to research AIDS therapy or cures- especially when Brazil almost definitely won't do the same to the next Viagra! So when private people sit down and decide which problems to solve, why would they pick something that'll make them lose their job, even if they succeed?
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Re: Americans responsible for majority of healthcare innovations

Postby ddxxdd » Tue Aug 04, 2009 1:25 am UTC

Vaniver wrote:The primary place this shows up is redundant tests- one doctor orders a scan in the morning, and another doctor orders a scan in the afternoon rather than go through the hassle of getting the information from the first doctor (and may not know about the first scan). That's a comparably small part of the problem.

The more significant part of the problem comes in when doctors profit from doing diagnostic procedures (and lose when they don't do diagnostic procedures), which are the consequences of doctors owning parts of the health care process and excessive malpractice liability. A significant number of procedures are picked to make the doctor money, or to defend the doctor against a malpractice suit.


From my understanding of America's current healthcare system, doctors are paid to recommend procedures. Any procedures. Regardless of how expensive or effective they are. I.e. if there's a $15,000 procedure that has a 1 in 10,000 chance of detecting anything, doctors will be paid to recommend it.

(Here's a source that will describe in detail how doctors and hospitals are paid not for results but for procedures. It's a 1 hour long read- maybe I'll sum up the key points later)

So misaligned incentives are a HUGE problem with our healthcare, and it proves that, even though we are getting more care as we spend more money, we're not getting the most bang for our buck.

Vaniver wrote:Iv wrote:
The "let's ill people finance medical science" vs the "medical science funding is a global effort" debate is an important one. The threat of Brazil's government to seize patents of AIDS therapy as a measure of national interest made me think about it quite a bit. I think that diseases are the most evident form of injustice. Saying that one must pay because he accidentally got a virus seems totally unfair. I understand how the current system keeps R&D money flowing (it is basically making people pay the right to stay alive) I think however that it is a worthy goal to try making it more ethical while insisting on the value of R&D. I think the guy you elected made strong arguments for both of these things.
The problem with Brazil's approach is that it produce a massive disincentive to research AIDS therapy or cures- especially when Brazil almost definitely won't do the same to the next Viagra! So when private people sit down and decide which problems to solve, why would they pick something that'll make them lose their job, even if they succeed?


I agree. Why not buy patents? Why not pay that company a sizeable amount of money and then make that cure public? Why not do that for ALL useful patents that are monopolized?
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Re: Americans responsible for majority of healthcare innovations

Postby Oort » Tue Aug 04, 2009 6:41 am UTC

I read an interesting commentary on that list just recently. In response to the point quoted in the OP, he said america is responsible for most scientific research in general, and it's no surprise we produce many medical products. But Britain and other countries make advances too despite national health care.
(http://mightygodking.com/index.php/2009/08/03/its-fine/ for the response I read.)

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Re: Americans responsible for majority of healthcare innovations

Postby Iv » Tue Aug 04, 2009 7:52 am UTC

Vaniver wrote:The primary benefit is that different pharmaceutical companies can try different models of funding R&D, and can have different targets. More successful models will get more funding, leading to a more efficient funding process on the whole- as compared to a unified funding model.
And how would it change with a national healthcare system ? That is what I fail to understand... From my point of view, the only change will be (if the reform reaches iots objectives) that the health infrastructure will waste less money on redundant processes. The goal is to keep competition but making it unprofitable to gain money by doing useless and costly medical procedure. Sure some firms may be currently funding R&D through these means, but I don't see any problem in making it less profitable. This is making the game of capitalism rolling again for the general good.

Vaniver wrote:The problem with Brazil's approach is that it produce a massive disincentive to research AIDS therapy or cures- especially when Brazil almost definitely won't do the same to the next Viagra!

In fact this is a bit a different debate, as I am not aware that Obama is proposing anything similar, sorry to have sidetracked with it, but this is just an illustration of the limits to the "profit==general good" ideology when applied to medicine. Sometimes, it goes against the health and even the life of a population to let pharmaceutical firms maximize their profits. There is a wide margin between regulating some practices in some fields and making R&D in these fields unprofitable. Selling AIDS drugs is still profitable, even at half the price. But one has to wonder what commercial incentive the firms selling AIDS drugs would have for a AIDS vaccine ? Especially if some patented knowledge used to create the medicine would be necessary for the creation of the vaccine. I think that competition is a very useful economical tool, but that it takes enlighted political intervention to keep it fair competition.

ddxxdd wrote:I agree. Why not buy patents? Why not pay that company a sizeable amount of money and then make that cure public?
From what I understood, this was an option that was rejected by the company until the government publicly threatened to seize patents for "superior national interest" (hell, for once it was used with its true meaning : stopping an epidemic). Then, they got a deal that allowed them to produce generics. They never actually seized patents.

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Re: Americans responsible for majority of healthcare innovations

Postby Zamfir » Tue Aug 04, 2009 11:49 am UTC

I don't see how the Nobel prizes work into this. Surely most of those were for basic work paid for by US government research grants?



The US gets these prizes because its government spends a lot on fundamental medical research as fraction of GDP , and because its unified, large program appears more effective in research than the combined smaller programs of smaller economies. The US might also be large in commercial medical research, but that could just as well be a side effect of the succesful governement research. The link between financing general healthcare and research is a lot less direct.

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Re: Americans responsible for the majority of healthcare innovat

Postby BlackSails » Tue Aug 04, 2009 1:08 pm UTC

Lucrece wrote:
Vaniver wrote:
Lucrece wrote:What good are the innovations if they're only going to a fraction of your people?
What good are cars, when only the richest can afford this innovation in transportation? --1905

The rest of the points in the link are salient- though non-Americans rate their health care system higher than Americans do, they rate the health care they actually receive worse than Americans do.


The issue here is the rate of innovation. Do we as a society mind slower rates in order to help the people who cannot afford insurance or die because they're afraid of going to the hospital and incurring debt? There's a difference between health and commodity (cars). Unless you interpret health as a commodity.


Do you know what makes "the next big thing" cheaper? Its not legislating it cheap. Its inventing something bigger and better.

If you slow down innovation, the people who get hurt are the poor people. The rich can still afford the newest thing, the poor cannot.

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Re: Americans responsible for majority of healthcare innovations

Postby General_Norris » Tue Aug 04, 2009 1:22 pm UTC

I fail to see how innovation halts in a public healtchcare system. When you innovate you patent it and then the goverment must pay for your patent.

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Re: Americans responsible for majority of healthcare innovations

Postby athelas » Tue Aug 04, 2009 1:57 pm UTC

As I said earlier, government-run healthcare saves costs partly because it has monopsonistic power, which by definition reduces quantity and price of healthcare. This leaves less revenue for providers, who then have less money for R&D.

Edited to add: I acknowledge that there are poor incentives in today's American healthcare system, most notably that the insurance paradigm means consumers don't care about the cost of their own care and will consume as much as they possibly can. However I don't see government-run healthcare aligning those incentives properly: Insurance For All would just exacerbate the problem, requiring a bureaucratic system to deny coverage for certain procedures to keep costs at a sane level (sound familiar?) If universal healthcare does save money, it is through monopsonistic market power and forcing Europe to shoulder a part of the R&D costs for the industry, which, as I mentioned, they're largely free-riding on right now.

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Re: Americans responsible for majority of healthcare innovations

Postby Zamfir » Tue Aug 04, 2009 2:25 pm UTC

athelas wrote:it has monopsonistic power, which by definition reduces quantity and price of healthcare


I don't think that's included it he definition, or even a necessary outcome. Look at defense spending, more monopsonic than any healthcare system. It doesn't obviously lead to lower prices or lower quantity. It's probably truer to say that the US government overpays for individual items to make sure that there is a long-term profitable industry to supply them with goodies when needed.

athelas wrote:forcing Europe to shoulder a part of the R&D costs for the industry, which, as I mentioned, they're largely free-riding on right now.


I am still far from convinced that this is the case. Most of the example you gave are about NSF spending, which is of course already a close to monopsonic buyer of research. Unless you are arguing that the US governemnt should spend less on medical research.

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Re: Americans responsible for majority of healthcare innovations

Postby Vaniver » Tue Aug 04, 2009 7:38 pm UTC

ddxxdd wrote:I agree. Why not buy patents? Why not pay that company a sizeable amount of money and then make that cure public? Why not do that for ALL useful patents that are monopolized?
Any nationalization / eminent domain problem runs into problems with bargaining. The person who owns the good in question doesn't want to sell it for 'fair market price,' because otherwise it would be for sale- but the government doesn't want to pay an arbitrarily high price for the good (if the benefit to you of owning the AIDS vaccine is $100 billion, I can set my price at $99.9 billion and you'll still profit from buying it- but almost all of the gains, instead of being realized by the government, will be realized by the person who held out for a high price).

Brazil's plan almost definitely includes paying the owners of the patents something. But it's almost definitely not enough to make them want to sell it without being forced- and as you imply, subsidizing desirable things is better at getting them made and produced than offering to steal them.

Iv wrote:And how would it change with a national healthcare system ? That is what I fail to understand... From my point of view, the only change will be (if the reform reaches iots objectives) that the health infrastructure will waste less money on redundant processes. The goal is to keep competition but making it unprofitable to gain money by doing useless and costly medical procedure. Sure some firms may be currently funding R&D through these means, but I don't see any problem in making it less profitable. This is making the game of capitalism rolling again for the general good.
If drugs and procedures are purchased by a monopsony, the monopsony can drive down the prices of those goods- meaning less profits, meaning less return on investment, meaning less investment.

Reducing unnecessary procedures is a different prong of the attack on ballooning health care costs- which is done by modifying the incentives given to doctors and hospitals, not by having a single bargainer to drive down prices paid.

Zamfir- that is a good point. But it means that which medical innovations get approved will be decided the way new equipment for the military gets approved- by which I mean the generals and admirals say "no, please stop making these, they're a waste of money" and the government decides to listen to the Congressperson who represents the district they're made in instead. In the current system, for a medical innovation to be used, doctors have to decide to use it- which they might do for silly or self-serving reasons, but that still strikes me as somewhat better than passing it over to bureaucrats or elected officials.
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Re: Americans responsible for majority of healthcare innovations

Postby General_Norris » Tue Aug 04, 2009 7:59 pm UTC

Well even if there's public healthcare there are still private companies around so the goverment must really pay. It's kind of troublesome though.


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