Healthcare innovation: The cost killer?


Healthcare innovations such as eHealth and telemedicine offer new prospects for cost savings and improved quality of care, but expensive new technologies are also driving medical inflation and the benefits may not always be distributed equally.

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Innovation is now at the heart of EU policymaking and the health sector is no exception. As part of a drive to create growth and jobs, it is one of the industries identified as capable of delivering the kind of knowledge-based economy described in the EU 2020 strategy.

These include eHealth, which is seen as having "huge potential" according to the EU executive's plan for economic recovery. eHealth is also one of Europe's six lead market initiatives. eHealth and telemedicine offer innovative products and new ways of organising the health system, although the market for this sector is primarily in countries with developed health services.

One major industry which has proven relatively resilient in the face of the economic crisis is the pharmaceutical sector. New medicines have helped create considerable wealth in Europe in recent decades and the EU is investing heavily in the Innovative Medicines Initiative to ensure that this trend continues.

Drug development and clinical trials bring together highly-skilled workers from the public and private sectors, something policymakers are keen to protect in an increasingly competitive global environment.

Similarly, the medical devices sector is a significant source of new high-end products which can help improve the safety and efficiency of healthcare. Diagnostics and imaging technologies, as well as surgical devices, provide around 435,000 jobs in Europe. Unlike the innovative medicines sector, medical devices are more commonly developed by small and medium-sized companies rather than blue-chip multinationals.

Innovations in how health and social services are delivered are also gaining prominence, not least because rethinking the traditional business model has the potential to deliver savings to public authorities. Treating more people in their homes rather than in hospitals will be a major feature of future health services, enabled by telemedicine, remote monitoring devices and technology that improves patient-compliance with medicines.

The major drawback to encouraging innovation is that it drives up the cost of providing healthcare. Medical inflation has been running well ahead of all other sectors, even at a time of economic hardship. Reconciling the need to have an innovative healthcare sector while health ministers are battling to control spending will be a major challenge.

Public authorities are concerned that public demand for the newest medicines and latest high-tech devices will send costs soaring, while the industry complains that investment in research and development is futile if there is no market for their innovative products.

This feeds into the wider question of equality and access to innovative healthcare. Globally, the gap between those who struggle to have their basic health needs met and the developed world, where some patients have ready access to life-saving medication and state-of-the-art preventative technologies, is growing.

Within EU member states, disparities are also opening up between the rich and the poor. In some countries, those who can pay for the best available care – either from their own pocket or through expensive private health insurance – have major advantage over those who cannot.

For publicly-funded universal health systems, the challenge is how to balance rising demand for costly new procedures for the few with the fundamental commitment to provide care for the many.

Innovation in healthcare - including pharmaceutical research - is one of the sectors expected to benefit from the Commmission's eighth research framework programme, called Horizon 2020. The estimated €85 billion programme - to be negotiated during 2013 - will not all go to healthcare, but 'societal challenges', such as the ageing demographic, and the need to keep people in employment for longer, are all key to the programme, and medicines that can assist in these aims will likely find favour and attract project funding.