Americans are responsible for the vast majority of all health care innovations

Great Debates
1

Thiscaught my eye:

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.
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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?

2

perhaps because Research Medicine is not the same as Practical Medicine?
I believe the NIH accounts for the lion’s share of the medical research dollars spent in this country and there’s nothing that would suggest changing the way practical medicine is paid for would change the research money our government spends.

edit, according to wikipeida it accounts for 28% of medical research spending in the U.S. so it is probably a good guess that no one else pays more than they do.

3

Clinical trials, which were mentioned in the quote, are often funded by pharmaceuticals and medical equipment manufacturers. Random exampleoff Google, and monopsonistic practices would constrain their sales and thereby their R&D spending.

4

Now i’m putting on my question-asking hat: when private investment dollars come in to medical research and clinical trials, at what point in the “innovative stage” are they… who has conducted and spent the time on the basic research - the stuff that is pure research and, at the time, shows no promise of a result.

5

For the last 15 years (I can’t be bothered counting since the 1970’s at the moment, but anyone else is welcome) the Nobel Prize in Physics has gone to U.S. residents more often than recipients from all other countries combined. In only two of the past fifteen years did a scientist living in the United States not win or share in the Physics prize.

Is there a substantial difference between the Physics “system” in the USA and the rest of the world that mirrors the difference in their medical systems?

Or is it just that the USA does particularly well in both these areas because it’s an extremely wealthy nation, with plenty of resources to spend on pure research?

6

Well again, Europe has both a greater population and a higher GDP than the US, which argues that wealth and population size are not the crucial factors here. Glancing at the wikipedia lists I see a lot more non-US collaborators in the physics list than the medicine one. Remember also that a number of prominent physicists emigrated from first Nazi Germany and the Soviet Union, providing a boost that did not exist (at a comparable level) for medicine.

7

Except that I’ve never heard of a pharm company spending more than 15% of its budget on R&D. And most of the basic research is done at NIH; the private companies mostly take care of the marketing, which is the biggest portion of their budgets (and why they charge so much for their products–all those ads can get expensive).

8

I’ve done a little more counting…

In the last 20 years, the USA vs rest-of-world numbers for the Nobel in medicine are 27:18.

In physics, it’s 31:19

I’d call that near as damn-all identical.

I don’t think that Nazi emigre’s can be much of a factor, considering I’m counting from 1989 onwards.

If you want to argue that the American research system in general is superior to the rest of the world, I can see a case to argue there. There are responses that could be made (eg, the US shares the same language, which Europe doesn’t), but on the face of it you’d have a point. But I can’t see that the Nobel data gives any indication that the medical system as such is superior in this area.

9

Also, how are measuring the amount of medical research? Is it just the total amount of money spent? The percentage of GDP? The percentage of money spent of medicine in general? Or the total number of trials, or of the number of drugs that are created? And do the attendant outcomes (reductions in morbidity and mortality) matter?

Counting the number of Nobel Prizes is a crude and useless way of going about this.

Maybe, maybe not. The more profit-driven a research system is, the more likely it is to approve (through various kinds of publication and institutional bias) drugs that are not actually effective, or that induce dangerous side effects.

10

I buy the premise that a single-payer system would reduce the amounts payed for individual procedures and medicines. As you suggest, that seems an inevitable consequence of monopsonistic market power. But it seems like a considerable leap to conclude from that premise that the overall money spent on research will therefore decrease. Unless I’m missing something, this seems to assume at least two things: (1) that whatever amount of profit lost because of reduced payments will not be recouped because of the changes resulting from a single-payer system (e.g. various economies of scale and lowered overheads, and having more people paying for health care than do under the current system); and (2) that medical research funding is substantially composed of profits from procedures and pharmaceutical sales.

I don’t know if the assumptions or true or false, but I would want to see some evidence before accepting them. My guess would be that (1) is going to be pretty speculative. IIRC, Medicaid’s overhead is between 4-6% of claims paid per year because of its economy of scale among other factors, while commercial insurance has an overhead 3-4 times higher than that on average. Since administration costs account for 31% of US medical spending, it seems plausible to me that gains made there could off-set the “losses” from monopsonistic behavior.

11

If there are any gains, wouldn’t they be recouped by the taxpayer or the government? Monopsonistic market power would reduce producers’ profit margins regardless.

12

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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I’ve been clicking through the list of Nobel Prize winers, and although I have not tallied the results, it sure doesn’t seem to me that the OP’s thread title is accurate.

13

It is my understanding that most medical and other basic research is government funded. Corporations generally just don’t care about the long term; which means they only want to fund research if it’ll bring them profits soon. I doubt that a government run health care system would change that.

Most people in America are unlikely to benefit from such research under the present system; less all the time. Exotic treatments you can’t afford might as well not exist. Americans are sicker and live shorter lives; so the “utilitarian calculus” says go for government health care regardless of any hypothetical effects on research.

14

Some of the benefits would go to the taxpayer. Some of them would benefit the providers, as in the case of an increased demand for medical care from the newly insured. The gains to the taxpayer resulting from decreased overhead could be reinvested in medical research, or the taxpayers could individually decide to invest in medical research companies.

It also isn’t just a given that producer’s profit margins go down. Lowered prices do not inevitably lead to lowered profits when demand isn’t held constant.

15

Well, I do know that any promising Dutch researchers who want to reach the true top of their field, go to work in the US. I suppose the same holds for scientists from many other countries. So, I wonder how many of those Nobel Prize winners are US residents only -versus people born in the USA.
Oh, I found a cite:

And that still means, of course, that the USA is an international centre of excellence for scientific research. You have to do something right to attract that much foreign talent.

16

Don’t disagree with the OP particularly, but it’s a mistake to use basic research to frame the argument. The US is certainly responsible for massive innovation in biomedical research, but it doesn’t follow that this excellence stems from national health care policy. The majority of Nobel prize-winning research cited in the OP is conducted in universities that started as curiosity-driven research at the level of molecules, not populations. Its too simplistic to connect government healthcare policy with research innovations that stem from such a multitude of factors. If you want proof of this you can look at the UK - Punches way above its weight in biomedical research against the backdrop of the NHS.

The cite about US winners of the Nobel prize in medicine is also wrong, although the intent of the OP to illustrate that a disproportionate number of winners are American is clearly correct.

17

Yeah, but that “something” is really just “have the world’s best universities” —and while grants are certainly important to universities, they’re not restricted by borders, and they tend to go disproportionately to the most prestigious university. Hence, excellence is self-regenerating.

18

I recall reading in Titan, the biography on Rockerfeller by Ron Chernow, that he estimates that something like 80% of all medical breakthroughs can be traced back to his many large medical endowments.

Point of interest: he hired someone to help him figure out what to do with all his money. One problem was that he had so much of it that almost anything he did would effect word markets, which was not his goal. And he wanted it to be apolitical. The person he hired (a minister, I believe) came up with the idea of medical research. He also endowed some small women’s colleges IIRC.

19

It seems to me that your point is if the US switches to some form of UHC medical research will stop, and I’m basing this on comments you’ve made in other threads on the topic of UHC. If this isn’t the case please disregard my post.

But to that point, I say bollocks.

If you take a company like Medtronic Inc, they make pacemakers and other medical devices. They spend a portion of their revenue on R&D to come up with newer and better devices. Currently, a $30,000 pacemaker represents about $28,000 in revenue, a small portion of which goes towards R&D.

If the US switched to UHC tomorrow, that wouldn’t change. After all, Medtronic sells pacemakers in Canada, Europe, Japan, Australia, and New Zealand and makes profit.

Switching to some form of UHC would mean that insurance companies stop making profits, not pharmaceuticals or medical device companies. People would still have pacemakers implanted, there would still be a revenue stream, and R&D would carry on as if nothing ever happened. There is even the slim chance that revenue would go up, because people that need them are able to get them.

There are, however, a few REAL situations that would in fact alter their revenue: 1) The government negotiates for a better price. Since they are the sole health care provider they have the buying power of a billion Walmarts and can get you, the consumer, a better price. But at the end of the day, isn’t that something you want? 2) The government does some research (or Boston cientific lobbie more) and finds that Medtronic produces an inferior product and refuses to purchase it. Now, if they are able to remain even slightly impartial, this again should be a good thing. Right now there doesn’t seem to be real market forces on medical devices. Doctors can choose them at will because they don’t pay for them, so price is never an object. Patients lack the information to make that decision, and often times don’t seem to get a choice. 3) The government decides pacemakers are too expensive and simply stops providing it as an option. This is a real issue, but what I actually like about it is that it becomes a public discussion. Are pacemakers worth the cost? Are they actually doing what the manufactures say they do? Are there more deaths and lives saved? These are important questions that I don’t believe the current system takes into account.

20

Traditionally the big pharmaceuticals would do the basic research and shepherd the compound from the lab to market.

What happens often these days is that small firms will do the basic research and if a compound looks promising, partner in a variety of ways with big pharmaceuticals and that way have access to their experience, money, connections, clout, etc., to do the clinical trials and filings. Even if a drug reaches the clinical trials stage or even the market there are plenty of chances that it’s going to be a clunker.