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New RAND Corporation Report: Redirecting Innovation in U.S. Health Care

28 April 2014 by NCCMMS

Redirecting Innovation in U.S. Health Care

Options to Decrease Spending and Increase Value

Download here.  From the report:

  • A leading cause of high and growing spending is new medical technologies. Previous studies aimed at reining in spending considered changing the ways in which existing technologies are used. Our work for this project focused on identifying promising policy options to change which medical technologies are created in the first place, with these two related policy goals:
  • Reduce total health care spending with the smallest possible loss of health benefits.
    Ensure that new medical products that increase spending are accompanied by health benefits that are worth the spending increases.


  • We conceptualize the health care innovation pathway as having three stages:
    1. creation of new products, which we call “invention”
    2. regulatory approval for sale in the United States
    3. processes that determine how and for which patients medical products are used, which we call “adoption.”


  • To help us develop policy options, we distilled five themes from the information we synthesized:
    • lack of basic scientific knowledge
    • costs and risks of FDA approval
    • limited rewards for medical products that could lower spending
    • treatment creep
    • the medical arms race.


  1. We also present five options for encouraging the invention of drugs and devices that would further our two policy goals by increasing market rewards.
    1. Reform Medicare payment policies.
    2. Reform Medicare coverage policies.
    3. Coordinate FDA approval and CMS coverage processes.
    4. Increase demand for technologies that decrease spending.
    5. Produce more and more-timely technology assessments.
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