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Outdated Payments Systems Aren’t Keeping Pace With Medical Innovation

June 17, 2015
We are experiencing an era of rapid medical progress thanks to the accelerated pace at which new breakthroughs are being uncovered. The compression in time between research and the creation of new treatments is a triumph for patients but a challenge for our outdated healthcare delivery system.

Our payment systems were constructed to finance medical costs that increased at predictable rates but are now outdated because of the breakthrough medical advances constantly being made. The cost of treating a disease, which was once paid over many years, must now be recognized in full, since many new treatments aim to cure a condition instead of just minimizing it.

Scott Gottlieb, M.D., Resident Fellow, American Enterprise Institute, explains how the increased pace of innovation has created the need for a new reimbursement system.

“Under these terms, the cost of the research and risk taking can’t be recouped over many years. More of it needs to be baked into upfront costs, since more of the drugs are bending the morbidity curve and changing long-term treatment patterns and their results costs.”

We need to reconstruct how we pay for new technology to embrace the quickening pace of innovation and ensure that patients have access to life changing treatments.

Scott Gottlieb, Resident Fellow, AEI, highlighted this issue as a speaker at BIO International Convention session “Ensuring Patient Access to Innovative Medicine.” You can find more details on the challenges of existing models of reimbursement and delivery here.