Abstract

Recent innovations in biomedicine seem poised to revolutionize medical practice. At the same time, disease and disability are increasing among younger populations. This paper considers how these confluent trends will affect the elderly's health status and health care spending over the next thirty years. Because healthier people live longer, cumulative Medicare spending varies little with a beneficiary's disease and disability status upon entering Medicare. On the other hand, ten of the most promising medical technologies are forecast to increase spending greatly. It is unlikely that a "silver bullet" will emerge to both improve health and dramatically reduce medical spending.

The pharmaceutical industry is facing substantial criticism from many directions, including financial barriers to access to drugs in both developed and developing countries, high profits, spending on advertising and marketing, and other issues. Underlying these criticisms are fundamental questions about the value of the current patent-based drug development system. Six major problems with the patent system are (1) recovery of research costs by patent monopoly reduces access to drugs; (2) market demand rather than health needs determines research priorities; (3) resources between research and marketing are misallocated; (4) the market for drugs has inherent market failures; (5) overall investment in drug research and development is too low, compared with profits; and (6) the existing system discriminates against US patients.

Potential solutions fall into 3 categories: change in drug pricing through either price controls or tiered pricing; change in drug industry structure through a "buy-out" pricing system or with the public sector acting as exclusive research funder; and change in development incentives through a disease burden incentive system, orphan drug approaches, or requiring new drugs to demonstrate improvement over existing products prior to US Food and Drug Administration approval. We recommend 4 complementary reforms: (1) having no requirement to test new drug products against existing products prior to approval but requiring rigorous comparative postapproval testing; (2) international tiered pricing and systematic safeguards to prevent flow-back; (3) increased government-funded research and buy-out for select conditions; and (4) targeted experiments using other approaches for health conditions in which there has been little progress and innovation over the last few decades.

BACKGROUND/OBJECTIVES: The importance of teams for improving quality of care has received increased attention. We examine both the correlates of self-assessed or perceived team effectiveness and its consequences for actually making changes to improve care for people with chronic illness. STUDY SETTING AND METHODS: Data were obtained from 40 teams participating in the national evaluation of the Improving Chronic Illness Care Program. Based on current theory and literature, measures were derived of organizational culture, a focus on patient satisfaction, presence of a team champion, team composition, perceived team effectiveness, and the actual number and depth of changes made to improve chronic illness care. RESULTS: A focus on patient satisfaction, the presence of a team champion, and the involvement of the physicians on the team were each consistently and positively associated with greater perceived team effectiveness. Maintaining a balance among culture values of participation, achievement, openness to innovation, and adherence to rules and accountability also appeared to be important. Perceived team effectiveness, in turn, was consistently associated with both a greater number and depth of changes made to improve chronic illness care. The variables examined explain between 24 and 40% of the variance in different dimensions of perceived team effectiveness; between 13% and 26% in number of changes made; and between 20% and 42% in depth of changes made. Conclusions: The data suggest the importance of developing effective teams for improving the quality of care for patients with chronic illness.

The economic importance of innovation brings with it an active debate on the impact public policy has on the innovation process. This annual series, sponsored by the National Bureau of Economic Research, brings the work of leading academic researchers to the broader policy community. This volume considers such topics as the implications of software outsourcing for American technology leadership; the complementary roles of large corporations and entrepreneurs in developing innovative technology; city-level policy and planning that establishes a "jurisdictional advantage" in the value of local resources; the effect of taxes on entrepreneurship; and how to incorporate innovation into the analysis of business mergers. These papers highlight the role economic theory and empirical analysis can play in evaluating policies and programs regarding research, innovation, and the commercialization of new technologies.

The second half of the 20th century witnessed spectacular advances in health care. Innovations such as magnetic resonance imaging, genetically engineered growth factors, and highly effective drugs for the treatment of depression, gastroesophageal reflux, high blood cholesterol, and HIV disease greatly improved the detection and treatment of both rare and common diseases. The advances greatly improved the outcomes of complex procedures such as organ transplantation, coronary artery bypass surgery, and high-dose chemotherapy (bone marrow transplantation) for acute myeloid leukemia and multiple myeloma. As the 21st century opens, technological progress in medicine is continuing and may be accelerating. It is a source of hope for the prevention, effective treatment, and cure of disease.

Technological innovation is also the major source of increases in real per capita medical spending in the United States. If medical advances continue to be adopted as rapidly as they have been, they will pose knotty economic, political, and ethical challenges for health care policy at a time when spending on health care in the United States has once again begun to surge after a mid-1990s pause and the number of Americans without health insurance has once again begun growing.

In response to a mail survey, 225 leading general internists provided their opinions of the relative importance to patients of thirty medical innovations. They also provided information about themselves and their practices. Their responses yielded a mean score and a variability score for each innovation. Mean scores were significantly higher for innovations in procedures than in medications and for innovations to treat cardiovascular disease than for those to treat other diseases. The rankings were similar across subgroups of respondents, but the evaluations of a few innovations were significantly related to physicians' age. The greatest variability in response was usually related to the physician's patient mix.