How the healthcare system discourages creating low-cost solutions

The U.S. leads the world in creating new drugs and healthcare tech, but the system discourages inventors from creating cost-lowering technologies in favor of ones with a healthy return on investment, according to an article at the Journal of the American Medical Association. "In the United States, the surest way to generate a healthy return on investment is to increase health care spending, not reduce it," says the authors, from the Uniformed Services University of the Health Sciences and Yale School of Medicine.

"The same forces that encourage adoption and dissemination of costly products discourage developers from creating cost-lowering technologies, even those that might produce substantial health benefits," the authors write, citing the central finding of a 2013 RAND Health report. That report's potential solutions include rigorous technology assessments and comparative effectiveness studies to help patients, physicians, and payers identify high-value products; authorizing Medicare to consider the price of competing products when setting payment rates; and for Medicare stop paying for drugs and treatments that are medically inappropriate or ineffective for particular conditions...