National Academy of Sciences

National Academy of Engineering

Institute of Medicine

National Research Council

The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the National Academy of Sciences.

The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Wm. A. Wulf is president of the National Academy of Engineering.

The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Kenneth I. Shine is president of the Institute of Medicine.

The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Bruce M. Alberts and Dr. Wm. A. Wulf are chairman and vice chairman, respectively, of the National Research Council.

Throughout the 1990s the U.S. health care system underwent significant changes. There were concerted efforts by large corporations and government purchasers of health care to limit increases in health care costs. In particular, managed care organizations sought to introduce greater selectivity in providing services. At the same time, the Clinton Administration committed to doubling the NIH research budget over 10 years. The Bush Administration subsequently endorsed this commitment. Throughout the decade pharmaceutical companies significantly increased their investment in R&D, and Congress instigated a fee-based system at the FDA to accelerate the review and approval of new drugs. There were also important changes on the demand side. The largest consumers of health care, the population over 65 years, increased at a much faster rate than the overall population. Health care consumers, particularly “baby boomers”, became better informed, increasingly through information drawn from the world-wide web, and, as a consequence, more demanding.

Against the background of a wave of new health care innovation and a growing demand for health care coupled with continuing concerns about escalating health care costs, the National Academies’ Board on Science, Technology, and Economic Policy (STEP) and the Board on Health Care Services initiated a project to identify the public policies needed to stimulate the development, adoption, and diffusion of high-value medical innovation. As a first step a conference on “Medical Innovation in the Changing Healthcare Marketplace” was convened June 14–15, 2001 in Washington, D.C.

For the STEP Board, concern with medical technology is part of an ongoing examination of economic performance and innovation changes at the sectoral level. In 1999, the Board completed U.S. Industry in 2000: Studies in Competitive Performance,¹ a study of the competitive performance in eleven industries, including the pharmaceuticals industry. For the Board on Health Care Services, the project builds on important parts of two reports of the Committee on the Quality of Health Care in America—To Err Is Human: Building a Safer Health System² and Crossing the Quality Chasm: A New Health System for the 21^stCentury.³ The project also seeks to update earlier work of the Board on Health Care Services and the former Council on Health Care Technology. Between 1989 and 1993, an IOM committee on technological innovation in medicine convened five workshops to “critically examine the process by which biomedical research is translated into actual benefits in medical practice.” Proceedings of each workshop were published and widely disseminated under the general series title Medical Innovation at the Crossroads.⁴

The Conference on “Medical Innovation in the Changing Healthcare Marketplace” highlighted many of the key factors that either foster or inhibit medical innovation. Two particular areas seem to us to warrant further attention. One is finding ways to improve the diffusion of highvalue innovation, and the other is to identify ways to foster the development of a much more sophisticated, yet affordable, health care information infrastructure.

During the conference David Lawrence of Kaiser Permanente reported on how the IOM Roundtable on Health Care Quality documented three types of quality problems—underuse, overuse, and misuse. With regard to underuse the Cochairs of the Roundtable commented,⁵ “Failure to use effective treatments (e.g., thrombolytics, beta-blockers, aspirin, and angiotensin-converting enzyme inhibitors) for acute myocardial infarction for all

patients who could benefit from these interventions may lead to as many as 18,000 preventable deaths each year in the United States.” Given the documented underuse of some medical technologies and the documented overuse of other medical technologies, several speakers at the conference questioned whether the right incentives are in place for the diffusion of high-value innovation. We believe that, rather than addressing the issue of incentives directly, a better understanding is required of all aspects of the diffusion process. The incentive structure may not be the only, or even the dominant, factor affecting the diffusion of high-value medical technology. As a result, we believe that a better understanding is needed of the drivers of and barriers to the diffusion of medical technology in order to identify the public policy levers that could foster the rapid diffusion of high-value medical innovation and limit the use of low-value technologies.

As has been observed before, the health care delivery industry invests in information technology much less than other information-intensive industries. On the basis of the presentations and discussions at the conference, we believe there are opportunities to add value in this area. One is to investigate how to integrate the thinking of production management and quality control into the health care delivery system. Such thinking is a necessary precursor to the acquisition of information technology in the health care delivery system. Another opportunity is to examine how government has stimulated the development of infrastructures in the fairly recent past to help develop a model for government stimulation of a much more advanced information infrastructure for health care delivery. Examples include the interstate highway system, the health care facility program (Hill-Burton Act), the Superfund, and the Internet.

This document summarizes the conference presentations. From the outset, the committee recognized that the conference could never comprehensively cover the subject of medical innovation. As a result, many issues such as reimbursement barriers to innovation, cooperation among government agencies regarding medical innovation, the impact of direct-to-consumer advertising, and how to deal with the bureaucratic burden imposed on the health care industry were only partially explored.

Further, this report is not intended to be a comprehensive report on the presentations. This is available on the Web (www.nationalacademies.org/med_innovations) through the transcripts of the presentations and the speakers’ PowerPoint presentations.

This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the National Research Council’s Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional

standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the following individuals for their review of this report: Robert M. Califf, Duke University Medical Center; Molly J. Coye, The Health Technology Center; David M. Cutler, Harvard University; Joseph V. Simone, Simone Consulting; and Ellen Stoval, National Coalition for Cancer Survivorship.

Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations, nor did they see the final draft of the report before its release. The review of this report was overseen by Richard A. Rettig, RAND Corp. Appointed by the National Research Council, he was responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution.

Finally, we would like to thank the other members of the committee for their valuable advice on the issues that should be addressed at the conference, their analyses of the issues raised at the conference, and their suggestions for initiatives that could foster high-value medical innovation. We would also like to thank the staff of the Board on Science, Technology, and Economic Policy and of the Board on Health Care Services for their support throughout the project.