Innovation and Cost

Numerous articles have come out on how innovation actually increases the financial burden of the health care industry. I remember hearing first about this in Steve Burrill's talk at Stanford, where he stated that the biotech industry is unique in that new drugs increase the cost of the system as they enter the market. Dave Chase has written many articles on about new models of healthcare.

One particularly memorable piece describes how applying innovation into the current model of healthcare has only risen costs. In the last Journal of the American Medical Association issue, Ezekiel Emanuel published an article on the Future of Biomedical Research. In it, he attributes rising healthcare costs to the NIH's funding of basic research in life sciences. While I don't agree that Dr. Emanuel's premises in article can actually lead to such a conclusion, it is a fact that new drugs will increase costs to the healthcare system. 

All of these voices have gotten me thinking. My goal has been to bring innovative technologies to market by tech transfer. In fact, this was what I wrote in my MBA application essays and my pursuit of business training has been because of this drive. Much like the common saying, "slow down to enjoy the scenery", I find myself slowing down to give the issue of innovation vs rising costs a thought. 

There appears to be two types of innovation that is required in healthcare. The one that I am most familiar with has been biomedical innovation. In order for new drugs, devices or vaccines to appear, there must first be a breakthrough on the bench. Eventually, a few of these breakthroughs will reach patients. However, new drugs come with hefty price tags and the current system becomes more strained.

However, innovation in healthcare delivery is another important part of the picture. The government has created legislation that will create incentives for movement, but ultimately startups will drive the products that enable it. I look forward to reading the book, The Innovator's Prescription : A Disruptive Solution for Health Care for more insight.

These two must occur in concert. There is mounting pressure from payers that drugs need to be not only be effective, but also cost effective. It would be important to consider these factors when hunting for technologies as a start up. In the biopharma space, an article describing companies pushing for increased patient engagement is a good step in this direction. It appears that the healthcare industry as a whole is on the verge of major disruption, and this makes it an exciting time for entrepreneurs. 

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