Great post by Cactus on the medical innovation issue:
most of the folks on the right who make this point will point with pride at the American military-industrial complex (to use Ike's term). They will note that American military equipment is often the best there is...
Anyway... why is it that a monopsony buyer of military equipment, a buyer that puts its suppliers on a cost-plus arrangement most of the time, hasn't managed to kill off innovation in military equipment but a monopsony buyer of health care would strangle all medical advance forever more?
Not clear. To be sure, the spending bloat in the armed forces is undeniable, so it's not a perfect model given the emphasis reformers like myself place on cost controls. But nor is it clear that much of the R&D is productive, rather than profitable. Genuine advances in care technology would find a huge market under a nationalized system, and could be ushered in and tested through high-end private (supplemental) insurance. It's possible, though, that the very minor tweaks that allow Claritin to be renamed Clarinex and kept on patent won't prove a profitable R&D outlet anymore, and we'll all cry many a tear for the loss.
Meanwhile, the public sector already does an enormous amount of the innovative work anyway, and if it is indeed true that a restructured system would harm PhRMA's business model, we could easily move towards pumping more money into public research and creating, as Joseph Stiglitz has suggested, a prize structure, rather than patent structure, for medical research. It would probably be far more efficient, with far fewer perverse incentives.
Lastly, many of these medical innovation conversations take place on the cutting edge of care. That's how we're trained to think about all this. But the greatest gains in health aren't likely to come from that end. They'll come from better preventative services, electronic records and treatments systems like the VA's ViSTA program, wider access to basic care, and more testing and attention given to what care actually works. We currently spend an awful lot on treatments that do awfully little, and we'd do much more to improve health were we as intent on making sure every heart attack patient was given an aspirin when he reached the hospital as we are on getting them a bypass procedure. Our current system, sadly, doesn't have the financial incentives in place to emphasize such low-cost, high-value, treatments. Nevertheless, their implementation would do a lot more for health than the average innovation.
