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