Why Healthcare Cannot Be a Completely Free Market

The concept of supply and demand is the cornerstone of economic theory. For simple commodities, the theory predicts that the demand for a product decreases as the price of the product increases and consumers are unwilling to pay the higher price. The supply increases as the price increases and suppliers increase production to capture increased profits. The actual price of the product is a compromise between the desires of consumers and the acumen of suppliers.

Tutorial on the Regulation of the Pharmaceutical Industry

The pharmaceutical market place is not entirely a free market. The extreme demand for lifesaving products can make standard economic assumptions inoperable. Therefore, regulatory mechanisms have emerged to protect patients and to provide patients access to affordable medications. There are three aspects of pharmaceutical operations in the U.S. that are regulated by the government:

Two Visions for Healthcare

It is clear that the U.S. cannot continue its current course in which healthcare costs are more than 17% of GDP and outcomes are significantly behind the rest of the world. It is also clear that Americans are an optimistic people with a firm belief in the idea of progress, which manifests itself in technological and business innovation. The two visions for healthcare that were presented at the Forbes Healthcare Summit are almost caricatures, however. There is opportunity for creative individuals and institutions. Technology has not been applied evenly in healthcare. While the U.S. can be proud of its innovations in high-technology procedures, its adoption of information technology is not even at the level of the pizza industry. Both visions emerged as a result of economic incentives, one to increase revenue, as was the case in Texas, and one to reduce costs, as was the case in upstate New York. The question now is how do we shift the incentives to create the proper mix of outcomes, cost, and risk?

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How does healthcare economics in the U.S. differ from traditional economics?

The concept of supply and demand is the cornerstone of economic theory. For simple commodities, the theory predicts that the demand for a product decreases as the price of the product increases and consumers are unwilling to pay the higher price. The supply increases as the price increases and suppliers increase production to capture increased profits. The actual price of the product is a compromise between the desires of consumers and the acumen of suppliers.

Clinical Trials in the Era of Personalized Medicine

Excerpts from the book Confronting Complexity X-Events, Resilience, and Human Progress by John L. Casti Roger D. Jones Michael J. Pennock preface table-of-contents Click to Buy Paperback E-Book Bundled The cost of sequencing an individual human genome is rapidly dropping below $1000. Much of the population can now easily access the details of their susceptibility…

The Patient-Driven Drug Pipeline

The new-drug pipeline is a mere shadow of its former blockbusting self. Despite the fact that R&D expenditures have been increasing over the last several years, the number of drugs in the pipeline has been decreasing. There have been many proposed explanations for this:

Healthcare Patents and Hot-Dog Vendors

While patents on medical devices seem normal, patents on drugs and chemical entities may seem like a stretch. I am not sure that the law makers in Venice in 1474, who invented the legal concept of a patent, envisioned the need to patent molecules. In fact, molecules were not even envisioned at that time. We all know that a patent allows an inventor time to commercialize his or her product, but are patents really needed for the economic viability of healthcare? Shouldn’t healthcare be all about saving lives and promoting health and not about making money on people who desperately need healthcare? Do patents have a benefit to patients, not just the patent holders? I think the answer to this question is “perhaps.” Patents promote diversity of products in the healthcare market place by forcing inventors to develop drugs outside the domain of currently patented products.

Goats, Cars, and Personalized Medicine

Personalized medicine will change the way physicians diagnose. With every person able to map his or her own gene, the complication in personalized diagnosis will increase beyond normal human mental capabilities. How will physicians of the future cope? The solution to the problem may start with something as incongruous as goats, cars, and game shows.

A Tutorial on the Regulation of the Pharmaceutical Industry

The pharmaceutical market place is not entirely a free market. The extreme demand for lifesaving products can make standard economic assumptions inoperable. Therefore, regulatory mechanisms have emerged to protect patients and to provide patients access to affordable medications. There are three aspects of pharmaceutical operations in the U.S. that are regulated by the government:

Two Visions for Healthcare

Last week I attended the Forbes Healthcare Summit in New York City. Over 200 healthcare leaders converged on Lincoln Center to discuss and forecast the future of healthcare in the U.S. The heady atmosphere of the conference will provide material for a number of blogs. In this blog I would like to focus on two different visions for the future that emerged in the conference. The first vision is an extension of our current trajectory in which space-age technology yields dramatic, but expensive, health outcomes. The second vision is one in which common-sense medicine produces low-cost very good health over a large segment of the population, but is not necessarily designed to accommodate specialized high-technology procedures.

How is healthcare different from a commodity?

“How is healthcare different from a commodity?” may be as enigmatic as Caroll’s riddle from Alice in Wonderland, “Why is a raven like a writing desk?” Lewis Carroll did not posit an answer to the riddle, but many people have suggested answers. My favorite may be, “Because neither one can ride a bicycle.” Because healthcare in the U.S. costs more than 17% of GDP and health outcomes lag behind other industrial countries, the answer to the healthcare question may need to be less frivolous than the answer to the raven question.