There’s a new innovation program at Kellogs Center of Biotechnology Management (Bnet Article). And it is just the kind of program someone should have thought of decades ago. It also reminded me of what I believe is a misguided innovation mindset we foster in the business of health.
From the program director Alicia Loffler:
We started the course last year. The idea is to have an experiential class that gives students opportunities to lead and innovate — and most importantly, fail. We place the students in teams of eight: two students from Kellogg, two students from the law school, two who are fourth-year medical students, and two from engineering. We let the teams shadow doctors from the medical school in order to come up with ideas. The law students help write the intellectual property, and the engineering students lead the development of prototypes…we give each team about $20,000 to develop their prototype. They develop a business plan around the product that can be sent to our corporate partners and potential investors. What I think is interesting is that the IP belongs to the students, not to Northwestern, so whatever innovation they come up with belongs to them. Last year, for example, we had 11 teams and most of them are still working on their innovations. Three or four have started real companies…one is licensing their innovation to a medical device company. This year, we have eight items and all have already incorporated and are writing provisional patents.
BNET: You have a work called “Rethinking the Biotechnology Model.” What’s the main thing the industry needs to rethink?
Loffer: There are many reasons why this area needs to be re-thought, and the financial crisis is giving us a further wake-up call. One of the major issues here is that this industry has been very fragmented. In the past, we have built our business around the product innovation. In the U.S. our competitive edge has been based on that: we have the best universities that produce the best innovations. Now we have innovations coming from Israel, Sweden, India, China, etc. The model where VCs throw a lot of money to push innovations through the clinical trials will just not work anymore; we need to be more efficient. It’s such a crazy system of clinical trials here, and it’s extremely expensive. What needs to be done is to rethink the process from end to end and to innovate throughout this whole supply chain rather than just on the product side. What is mainly needed is process innovation, not product innovation.
I’ve highlighted this last line because it points to reality that both governments and the private sector seem to miss. Biotechnology, pharma and related companies spin out new products each year, all of which are massively expensive, but which offer only marginal benefits over previous treatments. The greatest burden, and barrier, to improved health is in fact the proper use and speedy implementation of available products.
Some experts say that as much as half of the $2.3 trillion spent in the US does nothing to improve health. Each year, for example, the United States spends $450 billion treating heart and artery disease. Much of this is spent on expensive maintenance drugs, ongoing tests and procedures such as stents. Is an equivalent amount being spent on the underlying problems such as smoking, diabetes, high cholesterol and high blood pressure?
Pick virtually any chronic disease, and you will find disease modifying treatments. We can nip most illnesses that burden our society in the bud – but we don’t do it, because we aren’t efficient or well enough managed.
This is not to say we don’t need constant innovation in pharmaceuticals and devices – that’s what I do for a living! But it should not be our primary focus. Changing the ‘system’ is where most of our efforts should go.
Said in another way, new health care technologies generally do cost more than older ones; however, the only way to keep costs down is to spend on innovations that ultimately reduce spending and/or increase the productivity of a patient. Some health care costs can be reduced in relatively simple
ways that do not have to do with improving device or drug design, by slowing the development of conditions that would require devices.
A high-performance 21st-century health system must revolve around the central goal of paying for results. That will entail managing chronic illnesses better, adopting electronic medical records, coordinating care, researching what treatments work best, realigning financial incentives to reward success, encouraging prevention strategies and, most daunting but perhaps most important, saying no to expensive, unproven therapies.
So onward to a new healthcare system!
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