Here is my column on that topic. Excerpt:
In real terms, spending on American biomedical research has doubled
since 1994. By 2003, spending was up to $94.3 billion (there is no
comparable number for Europe), with 57 percent of that coming from
private industry. The National Institutes of Health‘s current annual research budget is $28 billion. All European Union
governments, in contrast, spent $3.7 billion in 2000, and since that
time, Europe has not narrowed the research and development gap. America
spends more on research and development over all and on drugs in
particular, even though the United States has a smaller population than
the core European Union countries. From 1989 to 2002, four times as
much money was invested in private biotechnology companies in America
than in Europe.
Dr. Thomas Boehm of Jerini, a biomedical
research company in Berlin, titled his article in The Journal of
Medical Marketing in 2005 “How Can We Explain the American Dominance in
Biomedical Research and Development?” (ostina.org/downloads/pdfs/bridgesvol7_BoehmArticle.pdf)
Dr. Boehm argues that the research environment in the United States,
compared with Europe, is wealthier, more competitive, more meritocratic
and more tolerant of waste and chaos. He argues that these features
lead to more medical discoveries. About 400,000 European researchers
are living in the United States, usually for superior financial
compensation and research facilities.
This innovation-rich environment stems from the money spent on
American health care and also from the richer and more competitive
American universities. The American government could use its size, or
use the law, to bargain down health care prices, as many European
governments have done. In the short run, this would save money but in
the longer run it would cost lives.
Medical innovations improve
health and life expectancy in all wealthy countries, not just in the
United States. That is one reason American citizens do not live longer.
Furthermore, the lucrative United States health care market enhances
research and development abroad and not just at home.
In other words, the case for national health insurance is far from clear. In terms of other reforms, one key question is how much waste could be reformed while keeping incentives for innovation intact. I am optimistic about the prospects for change, but this does mean that eliminating "waste" can have negative secondary consequences.
The argument has another angle, explored only briefly. The National Institutes of Health is one of the best governmental programs we have in the United States. Part of its success stems from its relative autonomy. It is harder to find worthwhile governmental R&D initiatives when Congress is pulling the strings on the specific allocations. We should do more along the lines of NIH, and lack of autonomy is one big reason why R&D programs such as synfuels did not turn out well.
And no, I don’t think the U.S. system is close to ideal:
American health care has many problems. Health insurance is linked too
tightly to employment, and too many people cannot afford insurance.
Insurance companies put too much energy into avoiding payments.
Personal medical records are kept on paper rather than in accessible
electronic fashion. Emergency rooms are not always well suited to serve
as last-resort health care for the poor. Most fundamentally, the lack
of good measures of health care quality makes it hard to identify and
eliminate waste.
Regarding research independence from politics, one trend I’ve noticed is that more and more research money seems to be given as an earmark, and less and less through NSF and the like.
Yes, the lucrative US health market encourages research.
But government funding of health research also encourages research.
What I would like to have seen in your article is some estimate of what share of research stems from each factor.
It would also be informative to see the trends in this.
I think we need to distinguish between scientific research (drugs, basic medicine) and medical quality research (Evidence-based or outcome-based medicine). The US is *way* behind Europe in understanding the impact of care, or even approximate relationships between spending and health on any but the most macro of levels. Decentralization means that we can’t get good data to evaluate current practices.
Unlike corporations, government can engage in much wasteful research without penalty.
Again, this is naive from a process perspective. The UK’s work on evidence-based medicine has allowed them to make care delivery far more efficient. In the US, every major hospital system has been studying electronic records internally for 20 years. CPOE and decision support is developed locally, and there are no standards for interoperability, with massive duplication of both research and engineering efforts.
It’s astounding how little data is available to systematically study care delivery in the US.
“Sick people receive more momentary comforts”
My personal experience with emergency care in London causes me to believe the opposite. Since I was in a great deal of pain, the admitting nurse gave me pain medication. This would never happen in the US because of lawsuit problems. My care took about than 3 hours total,less time than I expect to wait to see a doctor in a US emergency room. I got an appointment to see a specialist with in 24 hrs to confirm the correctness of my treatment. The strange thing was that everybody I encountered, including the doctors were apologetic because they assumed my care would have been much faster in the US.
My experience with HMO and fee for service with “end of life” care in the US leads me to think HMO’s do better at easing the pain for the family.
Research which is a public goods is in theory not efficiently provided by competitive markets. Why do you expect medicine to be different. With the current system our drug companies won’t even produce some vacines let alone do reasearch on them without government assistance.
My mother’s cousin in England had to wait two days to get treatment for a stroke. In the US they spend millions to educate older people on the signs of a stroke so they can get treatment within the critical first three hours.
Joan: “Research which is a public goods is in theory not efficiently provided by competitive markets. ”
Do you mean that private companies do not innovate unless prodded by government funds? Surely I’m misunderstanding this comment.
Was it a government researcher who developed Bell Labs’ transistor? Texas Instrument’s integrated circuit? Intel’s microprocessor? Edison’s light bulb? Sankyo/Merck’s Statin class of drugs?
What work is being done by all those research chemists at DuPont? or the research scientists at Exxon?
When IBM mathematician Benoit B. Mandelbrot invented fractal geometry, that wasn’t research?
Am I misunderstanding what you mean by the word “research”?
If we’re talking about reforming the U.S. health system, the key issue is whether, at our current margins, it is more important to come up with a new technology for curing disease or to provide people who have little or no health coverage with access to the health care technologies we have already. Given that current medical research in the U.S. probably includes longer-lasting botox injections and improved antidepressants for poodles, I suspect that expanded coverage is the more important issue.
jrfay,
I’m guessing you don’t have a chronic illness (not trying to be insulting, that’s just my impression). I do, and believe me, research is not just about “Botox and new antidepressants for poodles.” It’s the lifeblood of hope for a lot of us. My greatest fear is that changing the healthcare system the way you propose, treating it like a zero-sum game between advances for some and coverage for all, will bring the innovation some of us need badly to a halt.
JohnDewey, it’s absurd to point to the transistor or the integrated circuit as examples of free-market research in action. Bell Labs was able to spend so much money on basic research, etc., because it had been granted a government-sanctioned monopoly over the phone business in the U.S. More important, Jack Kilby was actually funded by the Air Force Office of Scientific Research while he was doing the research that resulted in the integrated circuit, and Texas Instruments only developed the I.C. after it got a contract from the Air Force to “study the application of molecular electronics to integrated circuits.” It’s also the case that both the transistor and the I.C. were seen as commercially viable only because the Defense Department was a ready-made customer for them.
How do we get from here:
“This innovation-rich environment stems from the money spent on American health care and also from the richer and more competitive American universities.”
to there:
“In other words, the case for national health insurance is far from clear.”
The assumption is that NHI must be accompanied by price controls, or as stated:
“The American government could use its size, or use the law, to bargain down health care prices, as many European governments have done.”
There are certainly other ways to moderate spending using a creative mix of market based and administrative mechanisms other than price controls. Innovation and security aren’t opposing choices.
William Goodwin: “it’s absurd to point to the transistor or the integrated circuit as examples of free-market research in action.”
My response was to Joan’s statement that research is not efficiently provided by competitive markets. I did misunderstand that she wasn’t referring to applied research, but only pure research. I’m still not sure I agree with her assertion.
I agree that Bell Labs was able to fund more research because of ATT’s monopoly. The transistor was not a good example of competitive market research.
I do not agree that Texas Instruments was free from competition. That Texas Instruments’ customer was the government did not free the company from the pressures of competitive bidding. Will you agree that bidding for government contracts does constitute a competitive market?
One request, Mr. Goodwin: Would you consider not prefacing your replies to my posts with the words “It is absurd”? I would have gotten your point equally well had you simply said:
“The transistor and the integrated circuit are not examples of free-market research in action.”
Allan Friedman,
The US has some really big hospital chains. Do you think Kaiser Permanente aggregates data across hospitals? Or how about Hospital Corporation of America? I bet they do some heavy data mining on their 200+ hospitals and 70+ outpatient surgical centers.
Does the University of California do data mining across their medical school hospitals?
jrfay,
Your suspicion is wrong. The big pharmas have more drugs in their pipelines against cancer than for any other disease or patient desire. My vague memory is that about half their pipelines are aimed at cancer. Makes sense. That’s where the money is. The money spent on botox is a pittance as compared to the money spent on cancer treatments.
The big problem in American healthcare is not a lack quantity of care. The big problem is that the diseases that are not curable are the really expensive diseases to treat. Lewis Thomas noted this almost 30 years ago in his Lives Of A Cell essay book. Effective cures are far cheaper than ineffective treatments that manage symptoms and slighly slow diseases.
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