Coss Effective

Little frustrates a consumer than to purchase a product only to find out shortly thereafter that a newer version, with more capabilities is just released and the price is the same. For most of us, this is just an inconvenience, but consider this: what if you are about to have a knee replaced. Not so insignificant an event. It is painful, requires exceptional surgery and risk, followed by months of rehab. How then would feel if the same were to apply, but the new product, a new and improved knee, would last twice as long as the one you just had implanted.

The Federal Drug Administration (FDA) provides oversight into new products that enter the healthcare arena. This is a valuable service, but not one without its costs as demonstrated below.

During the decade of the 90’s the number of Premarket Approvals (PMA’s) were cut by over two thirds of the average for the decade before. By 1992, the first year of the Clinton administration, only ten products made it through the FDA process. For the remainder of the decade the average was one third less than the decade before, and only slightly improving thus far this decade.

What is missing in the numbers above the blue bars, are the number of products not approved and in the end, delayed.  Hidden also are products who’s financial risk of trying to bring to market have been crowded out by the time-valued risk of trying.  Some of these products are knowable, some are not.  Still there is a cost, as to how dear that cost, there is only speculation.

There is little time to reflect on the relative merits of this “crack down” or possible fear of investment due to the threat of nationalization (the blue bars reflect the first three years of the first Clinton administration), still there is a human element. It boils down to this. Our healthcare economy includes lots of researchers, innovators and manufacturers looking for ways to improve healthcare through technology. The question we have is do we want that innovation quickly or slowly. If we are to listen closely to those advocating national healthcare, the “enemy” to be controlled are pharmaceuticals and the vague argument that technology is causing the rise in healthcare costs.

A chest x-ray costs more than a close listen with a stethoscope, and Aspirin and a cane is cheaper than a knee replacement. Technology is not the problem for healthcare but rather a solution, and getting it more quickly is better than more slowly.