Who is innovation in the US health care system actually for?

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Who is innovation in the US health care system actually for?

Postby Bob on Sun Oct 23, 2022 9:25 am

https://theincidentaleconomist.com/word ... ation-for/

Who is innovation in the US health care system actually for?

Gabriella Aboulafia
October 13, 2022

Innovation is considered one of the American health care system’s strengths. In theory, innovation makes health care better and less expensive because it leads to new treatments and lower costs. But because innovation and new therapies exist in the context of disparities in coverage and access to care, these benefits are not felt equally across the population; innovation itself has the potential to exacerbate and deepen existing disparities.

Innovation, particularly in drug manufacturing, has become a significant priority for the private industry. In 2019, the pharmaceutical industry spent $83 billion on the research and development of new drugs. Between 2010 and 2019, 60 percent more new drugs were approved for sale than in the previous decade. And in the federal government, both sides of the political aisle rally around innovation. Members of Congress have introduced several pieces of bipartisan legislation to “accelerate promising strategies to improve the health care system and ensure patients have access to cutting edge innovation.”

However, innovation in the context of American exceptionalism means that its benefits only flow to those already privileged by the system; like all other parts of the health care system, innovation is only accessible to those who can afford it.

In the US, people are at the mercy of their insurers or public programs (if they have coverage). Consequently, the regulatory approval of a new innovative product doesn’t guarantee its access.

Research has shown that there is significant variation in commercial health plan’s coverage decisions for specialty drugs, which have been touted as some of the greatest achievements in health care innovation (in recent years, more than half of the novel drugs approved by the Food and Drug Administration [FDA] have been specialty drugs). Not all plans cover these drugs equally — some plans don’t cover these medications at all, while others have more restrictive coverage.

Moreover, like all things in the US health care system, access to innovation is severely restricted for certain groups of people. Coverage for innovative therapies is even more limited for people in public insurance programs.

In the Medicare program, innovative treatment for people with end stage renal disease (ESRD) — a disease that disproportionately affects people of color — is a great example. In August 2021, the FDA approved a new drug called Korsuva to treat ESRD-related severe chronic itching. But Korsuva falls outside Medicare’s existing bundled payment for ESRD-related care.

There is a special mechanism to guarantee access to it for two years, but, after that, Medicare can choose not to cover it. It’s likely that Medicare will not choose to permanently add Korsuva to its ESRD bundled payment because there already are covered anti-itching medications (which are ineffective against ESRD-related severe chronic itching). With an annual cost of $17,000, it’s unlikely that individual dialysis centers will purchase and provide the therapy on their own, leaving patients with no good options.

People with Medicaid coverage also face more restricted access to innovative therapies that are ostensibly designed to help them specifically. Coverage (or lack thereof) for innovative treatment for people with hepatitis C virus (HCV) — which disproportionately affects Black people and people in prison — clearly underscores this problem.

People with Medicaid coverage face significantly higher rates of HCV. There are incredibly effective treatments available to treat people with HCV, but the costs of these treatments are prohibitively high (some manufacturers have priced standard treatment courses at $84,000). While some states have worked to ensure access to HCV treatment for people with Medicaid, access is severely restricted, because people have to meet onerous prior authorization requirements (in most states) and strict criteria in order to gain coverage. This has led to an increased risk of mortality among people with HCV who have Medicaid coverage, compared to those with private insurance.

And for people without insurance, access to innovation is oftentimes out of reach. Some drug manufacturers have programs that make some of their products accessible to those without insurance, but new medications are (at least initially) priced in ways that severely limit access.

When life-altering therapies are available, but largely out of reach for certain groups of people, it’s worth considering who innovation actually serves. For everyone to reap the benefits of innovation, it’s critical to consider who our health care system is designed to work for (and who it isn’t). Until then, innovation will improve the health and lives of some, while being largely out of reach to others.

Research for this piece was supported by Arnold Ventures.
Last edited by Bob on Sun Oct 23, 2022 9:27 am, edited 1 time in total.
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Re: Who is innovation in the US health care system actually for?

Postby yeniseri on Mon Oct 24, 2022 6:56 pm

Disclosure: I worked in clinical research (pharmaceutical industry) for over 18 years!
Pharmaceutical research is big business and it satisfies a need to better the lives of those who are at various levels of ill health while seeking always to maximize ROI at any costs before x patent runs out.

A bottle of water can be .50c in the super market, $2.00 at the gym, $3.00 at the movies and $6.00 on a place. Author unknown
The same with a simple aspirin or any drug..Pe rthe aspirin, it can be ,25c for a simple headache, $1.00 for regular pain, and for surgeries it can reach $5.00 depending on the severity of the disease, the specific health care facility, etc implying a clever strategy to maximize profit at the expense of (appearance, perception) cure or quality of life. If you have insurance, you can get all the drugs you want (within reason) but if you have no insurance, you are out of luck and are treated as such. Horror stories of ambulances dropping off patients to nursing facilites from a major hospital because the citizen cannot pay. There is no doubt that people come from abroad to seek health care but they gots to have the money.

I realize there are 2 sides to any story but en toto, the US HealthCare System is for those who can pay. There are also exceptions for some indigent citizens to get care but the profit motive is strong enough for even dubious drugs to remain on the market, or be used for other than accepted and cleared approval. Innovation saves lives but behavious get in the way based on ability to pay and ROI for the respective provides.

US health care is still good but how do we reconcile US infant mortality vis a vis the 10 developed countries with equal or better care for their citizenry ???
When fascism comes to US America, It will be wrapped in the US flag and waving a cross. An astute patriot
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Re: Who is innovation in the US health care system actually for?

Postby everything on Tue Oct 25, 2022 12:57 pm

couple of vague statements aren't really saying anything to me:
- new technologies are high priced at first and so are "consumed" by limited, rich entities or people who need them, willing to pay, able to pay.
- there is "price discrimination" (as economists call it). water is a good example. bulk discounts. etc. time after the innovation is first available.

these things are kind of broadly true, e.g., going to Space. Producing media. Electric cars. etc., etc. nothing new and it's not going to change / no reason I'd think it would/should in general. if this is the end of the article, it makes no sense. It's written by someone who has no understanding of business or economics if so.

But for healthcare, the author, or perhaps you rsf folks, are saying something ELSE, right?

is it:
- the innovations should be available to those who most need them, regardless of payment ability? so someone else should pay?
- "Big Pharma" does "need" a return on investment, otherwise, there won't be "Big Pharma". Same with any other tech company. So should there be some "price cap"?
- something else?

Interested to hear the arguments or proposed solutions...
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Re: Who is innovation in the US health care system actually for?

Postby Bob on Wed Oct 26, 2022 11:27 am

One point is that the quantity & quality is signicantly rationed by wealth & income distribution - subsidies & tax incentives also influence rate and types innovation - the late Economist Clay Christensen had an interesting model on disruptive inno action of block buster drugs - another model on price discrimination used generic development & drug pricing based on Canadian and U.S. markets - but I'm retired so I haven't kept up on the literature lately
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Re: Who is innovation in the US health care system actually for?

Postby everything on Wed Oct 26, 2022 12:27 pm

generally as a business person, and would-be economist, I can't really argue against price discrimination in general non-health, disposable income cases (the bottle of water example is good, but in that case, you can just choose to not buy the theme park or movie theater water, so it's different). It extracts "consumer surplus" from those "willing to pay". Season tickets, child meals, senior discounts, etc. are other good examples. But all of those are still voluntary and aren't exactly needs. Everyone needs healthcare.

To make it slightly personal, a lot of people I know would like whatever cartilage treatment the Dara Torres (the 40-year old at the time Olympic swimmer) got (at probably huge expense). It's also voluntary and arguably the rest of us don't actually need it the way an Olympian does.

If it's a treatment for fatal, but rare, incurable diseases, it seems more problematic. Where does the ethics and politics bump up against the "economics"?

I highly doubt there is an "easy" theoretical answer, far less so for actual politically viable answers, but it would be good to know (if RSF people have any answers or ideas...)
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