Spending on medtech innovation benefits overall U.S. economy, study showsSpending on medtech innovation benefits overall U.S. economy, study shows

Developing advanced medical technology and shepherding it through the regulatory process is expensive, but industry associations and lobbyists have long argued that the benefits far outweigh the costs. In fact, many contend that healthcare advances have a significant positive impact on the broader economic front. Now, the Milken Institute has published a lengthy report that attempts to back up those claims with hard numbers. It also lays out three possible economic scenarios for the next 25 years, depending on whether R&D incentives are reduced, remain the same, or are increased.

Healthy Savings: Medical Technology and the Economic Burden of Disease takes a "systematic approach to documenting the full costs and broader economic benefits of investment in representative medical technologies used to address four prevalent causes of death and disability," write the authors. The study looks at innovations in the treatment of diabetes, heart disease, muscoloskeletal disease, and colorectal cancer, and the associated costs and benefits, between 2008 and 2010.

In the case of diabetes, for example, analysts concede that the use of insulin pumps costs more than self injection. However, "the net health system expenditure . . . was $608 lower per pump user," write the authors, when you consider that they are less likely to visit the emergency room and are less exposed to potential side effects such as amputation, kidney failure, and blindness. In terms of gross domestic product, the report estimates that insulin pump users made a positive per capita contribution that was $5278 greater than diabetics who self inject because of their workforce participation and increased productivity. The net benefit to the overall economy, therefore, is $5886 ($5278 + $608) per patient, according to this calculation.

Based on this methodology, Milken found that the net annual benefit from the technologies used to diagnose and prevent these four conditions totaled $23.6 billion and that federal income tax revenue increased by $7.2 billion because of improved labor market outcomes.

In an interesting predictive exercise, analysts prepared three alternative scenarios through 2035: in one, innovation incentives were unchanged; in the second, incentives were increased; and in the third, incentives were cut back compared with the 2008-2010 baseline. If incentives increased during those 25 years, analysts predict that the nation's overall economy would gain $1.4 trillion.

Although explicit policy changes are not tied to these scenarios, the authors note that if medical device taxes are reduced or repealed, for example, "the device industry is likely to invest more in innovation and follow the increased incentives projection."

The study was made possible, in part, by support from AdvaMed, the Advanced Medical Technology Association.

— Norbert Sparrow

Norbert Sparrow is Senior Editor at PlasticsToday. Follow him on twitter @norbertcsparrow and Google+.