The future of healthcare economics – innovation

4 min read
First Published: 
Mar 2006

Key Learnings contained in this article:

At a recent meeting on healthcare communications, one speaker referred to what he called new innovations. Perhaps his enthusiasm made up for a lack of linguistic acuity, for clearly innovation is by definition new. After all, the word itself contains the Latin novus .

Nonetheless, innovation – defined in my dictionary as ‘the introduction of something new; a new idea, method or device’ – is surely something to be enthusiastic about. In industry generally, and in the pharmaceutical industry in particular, innovation is vital.

And health economists are ideally placed to produce it. That means going beyond your traditional role in cost and reimbursement and into a broader mandate affecting healthcare as a whole. As health economist and former GlaxoSmithKline UK executive Joe Caputo puts it: “Health economists’ profile, both within and outside companies, is expanding. They’re advising and crafting guidelines for bodies such as NICE in the UK and formularies in the US .”

Corporations are seeing a role for you earlier in the clinical trials phase and later in post marketing surveillance; in other words, becoming an integral part of a drug’s life cycle, including risk management – vide Vioxx – and partnering with payers and clinicians to explain how the methodology of your work influences quality throughout the healthcare system.

Moreover, says Dr Marc Berger, Vice President, Outcomes Research and Management for Merck, there’s something on the horizon called behavioural economics, which is beginning to look at why individuals “don’t always act as rational homo economicus ” – something that he says will become increasingly important as patients take on greater responsibility as payers and selectors of healthcare services.

Innovation for health economists will mean further incorporating into your work statistical tools such as Bayesian analysis, contributing to the broader scope for analyzing the varying effects of drugs on certain groups of people, and using sophisticated statistical methods to satisfy more sophisticated audiences. Another Joe – Joe Hogan, president of GE Healthcare Technologies – was quoted in the Financial Times (Feb 10, 2006) as saying that there’s a need to move an increasingly global industry to what he calls “early health”. In other words, prevention, advances in technology, data processing, and communications allow for early prediction of disease and scope for remedial action rather than belated, costly treatment.

All of that creates an educational role and challenge for health economists – communicating to all the stakeholders in healthcare about how rigorous and transparent health economics can enhance knowledge and outcomes. That’s going to take speaking and writing about your work in a way that’s persuasive and understandable. There may not be much innovation going on in the pharma industry at present, but that doesn’t mean you can’t be innovative in presenting what now exists.

Eminent Yale University economist and author of Irrational Exuberance Robert Shiller is known for expressing his work in layman’s language. He’s quoted as saying: “One of the great innovations of our time [is] bringing psychology back into economics.” And: “One practically has to be a renaissance man (or woman) to achieve good work in economics.”

Plenty of scope for innovation there.

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David Woods
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