Will UHC stifle innovation?

The exhorbitant cost of U.S. healthcare is constantly compared to the significantly more efficient systems in Europe and Canada. We know all the arguments: price controls on drugs and procedures, limiting costly and often unnecessary tests, pooling resources, etc. Assuming these cost-cutting measures will directly hit the bottom lines of the companies who develop the drugs and innovate new diagnostic and treatment technology, a majority of those here in the U.S., will a drop in profit margin equate to a drop in innovation? One popular example is the fact that a simple MRI costs less than half in Europe as it does stateside. But, doesn’t it make it a lot easier for Europe to slash costs if the high prices in the U.S. contributed to the invention of the MRI in the first place? How would the Canadian healthcare system look without American companies doing most of the heavy lifting when it comes to new drugs and treatments? I ask this fully realizing Europe, particularly England, make plently of contributions themselves. But, aren’t the high prices in America just as much of a profit motive to them as well?

Nah. The issue at hand is who pays for medical treatment, not who’s in charge of it, or who’s developing it.

Yes, but the purpose of the law, in addition to covering everyone, is to rein in the cost of providing that care which means less money spent on drugs, diagnostic testing and uneccessary procedures, all of which will cut into the profits of the companies who develop drugs and manufacture equipment.

Hopefully, it will also work to limit run-on sentences like the one above.

UHC should reduce profit margins at the drug companies.

It might “stifle” innovation to a certain extent, but innovation of what? For things that would not generally be covered by my government plans, yes it probably would stifle innovation. But what are those types of drugs would be the question. It would be easy to hazard a guess that elective, cosmetic, types of drugs might not make it to market. Would the world be better or worse off without Rogain?

Then again drug companies would be incentivized to create lots of cheap universal vaccines that serve the public good. With more universal vaccination, health costs would probably drop to a certain extent since things like the whooping cough might be gone for good.

I doubt it; they spend more money on advertising than on medical research, and spend a lot of their medical research funds on coming up with slight variations on drugs they already have. They rely on government funded research for basic research.

Not to make it sound like I oppose UHC, because I generally don’t, but consider this: New drugs are staggeringly expensive to bring to market. R+D for most of them is only possible because of the profits made from blockbusters like anti-depressants and boner pills, medications that are often over-prescribed or taken by people who may not have a strict need. If price controls are employed (assuming we ever get there), I’d be concerned drug manufacturers would focus their attention on precisely the kind of vanity drugs (Rogaine) that aren’t covered by insurance anyway.

A sizable chunk of that profit goes to the insurance companies, not the doctors, biochemists, and inventors, but I guess the best example is to point at medical innovations that are still coming out of the U.K., France, Canada and other nations with various flavours of UHC.

And for you, a medical innovation that you can’t afford might as well not exist anyway.

I would hope your government plan would cover MRIs, heart valves and artificial hips.

Just for clarity, are you suggesting that all of those owe their existence to the USA model of healthcare?

No, but it’s not unreasonable to suggest their development and/or continued improvement is aided by the enormous profits generated by the high price tag and, at times, overuse inherent in the American model. An increasing number of doctors are saying that procedures, particularly diagnostic procedures, are grossly over-prescribed and clinics are under constant pressure to purchase the very latest in equipment. This creates an obvious profit motive that would be curbed if the number and price of those procedures are brought down to Earth. The same can be said for pharmaceutical development. How much difference would it make to R+D in the end? I have no idea. But it certainly merits some concern.


The US clearly does need some sort of healthcare reform. But on the other hand, for-profit medical care is clearly a powerful force contributing to inovation. Perhaps the solution is to create a sliding scale of sorts, where drug companies still make money but the poorer you are, the more of your healthcare the government pays.

Or, you know, we’d do public research with public funds, which is what has largely worked to this point.

Not really. Many of these innovations make a disproportionate amount of their profits from the US market.

On average, it takes pharmaceutical companies about 15 years at a cost of $500 million for each drug they bring to market, factoring in all the failures. (I’ll dig up a cite if you need it.) Will they keep that up if they can’t charge 2 bucks a pill for Lipitor?

VC, I think your numbers might be average. Drugs like Lipitor and other big use items IIRC cost in the $1-2 billion range.

I think it obvious that big profits in the US help fund R&D, and that if there is less profit then less money for R&D.

The key question is the current R&D model an effective use of investment dollars to fund innovative new drugs that have a “broader” or “UHC” application?

What do you mean by “broader application?”

No. There’s been a drop of drug innovation for quite sometime due to the fact that pharmaceutical companies primarily focus on developing drugs that’ll be profitable. It’s pretty new but the U.S. government started their own pharmaceutical company. Frankly, it’s a good move. The government is much better with research than the private sector.

  • Honesty

Rogain has a pretty narrow application. It was around 1980 when it was being developed for something else (that didn’t pan out) but discovered that it promoted hair growth. I started balding at the end of high school and been bald for decades. That said, IMHO Rogain doesn’t have a broad or UHC type application that say Lipitor does for controlling high cholesterol.

I would expect if UHC covered the US and more of the globe, then you would see more R&D being put into “greatest good for the greatest number” type drugs and less into vanity drugs. It will probably also reduce the R&D for more esoteric type specialized drugs (for example specialized chemotherapy drugs instead of whatever are the standard ones) which are extremely expensive today, and not widely prescribed).

Interesting link, thanks. I do know that Big Pharma has been shifting more and more of their development into slight changes to existing, successful drugs so they can maintain exclusive patents, which, of course, does little for public health.