Why Maximizing Innovation Is The Most Important Health Policy Priority


ACRU Staff


September 29, 2014

ACRU General Counsel Peter Ferrara wrote this column appearing September 28, 2014 on Forbes.com.

President Obama sold Obamacare to the Left on the grounds that it would achieve universal health insurance coverage. But even the Washington Establishment CBO says it will still leave 30 million Americans uninsured 10 years after full implementation!

Moreover, the effect of the Obamacare mega-reform so far is ambiguous at best, with millions of Americans already losing the health insurance they had and liked, exactly contrary to what they were promised. When the employer mandate becomes effective, these Obamacare victims may balloon to tens of millions more (which was why Obama unilaterally delayed that mandate, contrary to the express language of the law he signed).

Obama tried to sell Obamacare to business and those more conservative on the grounds that it would reduce health costs, promising working people a reduction in health insurance costs of $2,500 a year. But after all the added regulatory costs and taxes on health insurance and health care, the result has been more nearly the opposite of that. (The incentives of expanded third party health insurance coverage — if Obamacare ever actually achieves that — would also increase health costs).

But more than universal coverage (though I have argued that free market health reforms can be designed to assure universal health care for all when needed), or even reduced health costs (though the incentives of free market health reforms have been proven to reduce health costs in the real world), the most important health policy priority is maximizing the freedom and incentives for health care innovation. That is because the rapidly advancing science of health care and technology is now offering on the horizon dramatic breakthroughs in human health and longevity (which also portend epochal reductions in health costs).

The incentives and policies of Obamacare, however, would do exactly the opposite, ultimately squelching health care innovation.

Personalized Medicine

As Newt Gingrich explains in his latest book, Breakout, one revolutionary, cutting edge theme in modern health care is personalized medicine. That would be based on the complete mapping of the exact genetic make-up of each individual. “In a matter of years,” Gingrich writes, “every patient in America could browse his own complete genome on an iPad.”

Doctors could then use that information to customize drug therapies and other targeted treatments designed to work for each individual given that individual’s precise genetic make-up. Gingrich elaborates that doctors can use that individualized information of who each individual is biologically “to personalize treatment, monitoring patients who are genetically or constitutionally predisposed to certain problems and delivering custom drug cocktails or targeted treatments as needed.”

As Gingrich implies, the individualized information for each patient will not only tell doctors how to fix any problems for that patient that develop. It will also tell doctors what to look out for, and monitor for the earliest possible warning, for each patient. Modern technological developments are also revolutionizing that monitoring as well.

Gingrich quotes Dr. Eric Topol, long time head of the cardiology department at the legendary Cleveland Clinic, explaining that “tiny sensors on the skin — or even nanosensors in the blood stream — could “remotely and continuously monitor each heart beat, moment-to-moment blood pressure readings, the rate and depth of breathing, body temperature, oxygen concentration in the blood, glucose, brain waves, activity, mood — all the things that make us tick.” Gingrich adds, “These data will be available not just for patients in the hospital hooked up to cumbersome monitoring contraptions, but for everyone at all times, accessible constantly with apps on our smartphones.”

Gingrich explains how doctors will be able to avoid harmful and costly developments armed with this individualized, real time, information, “Nanosensors in the blood, for instance, might alert doctors to an impending heart attack. They could respond with precise doses of blood-thinning medication. Other sensors might monitor for early signs of breast cancer in the bloodstreams of patients who are especially at risk, while low-risk women could avoid frequent screening procedures.”

Notice the comprehensive cost savings from this much better health care of the future. Avoiding preventable heart attacks or early resolution of breast cancer will save fortunes. Moreover, monitoring costs could be avoided for those not at risk, or reduced for those at low risk. But even monitoring costs for those at risk would be sharply reduced by the new technologies. And as Gingrich points out, “These breakthroughs are not decades away; many of the technologies are here now.”

Gingrich calls these cutting edge, modern health care developments “mass personalization.”

Regenerative Medicine

A second revolutionary, cutting edge theme in rapidly developing modern health care is regenerative medicine. As Gingrich explains, that “focuses on healing or replacing patients’ organs or tissues using their own cells rather than using drugs or relying on organ donations.” Gingrich emphasizes that this is so “exciting because it really has the opportunity not just to manage disease, like a drug would, such as for someone with high blood pressure or diabetes, but really to cure it.”

At the Wake Forest Institute for Regenerative Medicine, “They are literally growing organs in the laboratory that can become functional in the body,” Gingrich reports. Researchers at the Institute extract cells from a patient’s failing organs, such as a bladder. They put those cells in an incubator that matches the conditions of the human body. The cells reproduce into further cells of the organ from which they were taken.

When sufficient organ cells accumulate, the researchers use a special biomaterial, similar to cloth, to create a scaffold in the shape of the needed replacement organ. With a dropper, they coat the scaffold with the newly regenerating cells, and place it all back in the incubator. The cells continue to reproduce around the scaffold in the shape of the new organ. Ultimately, the now regenerating organ is transplanted into the patient’s body, where it continues to develop. Within a few weeks, the biomaterial bladder dissolves, and only the new, healthy, transplanted organ remains.

Dr. Anthony Atala, Director of the Wake Forest Institute, told Gingrich, “Today, [we] have bladders that have been planted into patients… that have been walking around for twelve years with their engineered organs.” Atala’s researchers now “are working on organs and tissues for more than thirty different areas of the body, including muscles, arteries, blood vessels, heart valves, kidneys, and livers.”

The next avenue for this research is to use 3D printers to build the new organs, which are already generating new bones, muscles and cartilage in the lab. Atala explains the next step, “where we print right on the patient… you actually want to have the patient on the bed with the wound, and you have a scanner… that first scans the wound on the patient, and then it comes back with the print heads actually printing the layers that you require [to create the replacement body parts] on the patients themselves.”

Gingrich adds, “Atala demonstrates a machine that takes a 3-D scan of a patient’s kidney inside his body and digitally slices it up into thin layers. This information is used by a 3-D printer to ‘print’ a prototype
kidney by laying down scaffold material along with the patient’s own cells.”

Gingrich explains the full potential: “If your kidneys are failing today, you require dialysis, which takes many hours a day. Tomorrow, your doctor may instead print new ones. Today, nine out of ten patients waiting for a transplant are waiting for a kidney. That’s more than [93,000] people. In 2011, almost [5,000] people died waiting. Moreover, 355,000 Americans are on dialysis [costing] taxpayers $20 billion a year. The annual cost of dialysis is a quarter of a million dollars per year per patient…. A lab grown kidney would be a bargain in comparison and of course would provide an enormous improvement in quality of life.”

Note again the enormous health cost savings from manufacturing new kidneys, to replace dialysis, along with enormous improvement in the quality of the health care. Gingrich adds further, “Are you one of the nineteen million Americans who suffer from diabetes? Instead of living with a chronic disease for decades, you could one day get a new pancreas grown by your doctor. Since diabetes costs $245 billion every year, these too might be a bargain. Certainly, they’d be lifesaving for the 1,400 people now waiting for a transplant.”

Gingrich summarizes, “These technologies have the potential to give us much longer, healthier lives in a very different world — a world in which diabetes, heart attacks, and even cancer are either completely avoidable, or merely short term inconveniences…. [W]ithin the next 10 years, we could achieve a breakout in health that would have been almost unimaginable even one generation ago.” This is why maximizing innovation is the most important health policy priority, more important than universal health insurance coverage, or reducing health costs.

Central Planning, Regulating, and Taxing Health Care Innovation Into Oblivion

Unfortunately, Obamacare forces the health care system to move in exactly the opposite direction from personalized, individualized, and custom-made regenerative medicine. Instead, Obamacare centralizes and nationalizes health care through one size fits all medicine centrally planned from Washington.

Obamacare empowers the federal bureaucracy to determine exactly what your health insurance must cover, through regulations defining the employer and individual mandates. Trailblazers of revolutionary, breakthrough, medical innovation as described above have to go to Washington to educate federal bureaucrats, who have no economic incentive for timely action, or adequate medical education, about the latest in cutting edge medicine before the innovators even get the word out to medical professionals.

Moreover, Obamacare empowers the federal bureaucracy to issue national guidelines for doctors and hospitals regarding medical practice, based on what the bureaucrats in Washington supposedly know about the “comparative effectiveness” of the alternatives. Such national guidelines are central planning, one size fits all medicine just the opposite of the personalized, individualized, custom made medicine discussed above. And what is the chance these Washington bureaucrats, with no effective economic incentives, or adequate medical education, will be up to speed about the latest in medical innovation as described above? Or will they be years and years behind the latest developments, like Washington bureaucrats always are?

Indeed, Obamacare further empowers federal bureaucrats to economically penalize doctors and hospitals through sanctions on their payments for services rendered, for not following the national guidelines, however outdated they might be. Obamacare also effectively empowers federal bureaucrats to determine whether and how much trailblazing innovators will be paid for their breakthroughs, such as those described above. That arbitrary, central planning power squelches the incentives for innovators to invest the millions and billions necessary to develop their innovations and bring them to market.

Obamacare also empowers another, new, federal bureaucracy, the Independent Payment Advisory Board (IPAB), to make further cuts to Medicare with no further Congressional participation, meaning no democratic accountability. Gingrich explains, “Will Medicare cover the nanosensors that Dr. Topol predicts will warn of heart attacks before they happen? Will it pay for the blood glucose-level monitors for diabetics? Will it cover drugs that are customized just for you? The IPAB experts will decide. All we know for sure is that the board’s ultimate aim is to cut costs, not necessarily to improve care.” And that this is more central planning, nationalized medicine, just the opposite of the personalized, individualized medicine discussed above.

Then there is Obamacare’s medical device tax, which Gingrich reports the FDA is interpreting broadly to tax all the cutting edge monitoring breakthrough devices discussed above. “The agency plans to treat health related mobile apps, of which there are already more than a million, as medical devices,” Gingrich writes. “Smartphone-linked sensors will be regulated and taxed by the federal government.” This will just further squelch incentives for development of the above described breakthroughs.

Obamacare only reinforces the FDA blockade on such innovation. Gingrich explains that the FDA plans to subject the above discussed personalized, individualized breakthroughs to the same regulatory tests and barriers as one pill fits all medicine. He writes, “In pharmaceutical trials, every pill is identical. That’s what makes the kind of testing the FDA demands statistically meaningful. But with regenerative medicine, as another doctor reminded me, ‘you’re using the patient’s own cells, so every time you’re creating a product, you’re really creating a different product because it’s unique to that patient.’” So are we going to sit by and watch the FDA require fatally ill people to take death sentence placebos instead of personalized drugs and treatments based on their own individual genetics, or manufactured organ transplants that would save their lives?

Gingrich further asks, “How can any company personalize its drug for you if it had to spend hundreds of millions of dollars on a two-thousand patient clinical trial for the FDA?” Such a regulatory cost burden would be a death sentence for the incentive to invest in the emerging health care breakthroughs discussed above.

Americans like to think that they have the most advanced health care in the world. But FDA overregulation is already driving health care innovation to other countries abroad years before it shows up in America. The FDA regulatory mandate needs to be legislatively amended so that the agency’s regulation is only focused on whether innovation is safe, not whether it is effective. Regulation regarding effectiveness has been proven to squelch innovation by adding hundreds of millions, or even billions, in regulatory costs for each new development. Whether any medical care is effective is a question for your own chosen doctor, not federal FDA bureaucrats who know nothing about you.

Gingrich summarizes, “The Obamacare law gave federal bureaucrats the authority to write thousands of rules that will determine everything from what treatments insurers will cover and how much doctors are paid to how the government handles your personal health information…. This approach comes with lots of bureaucrats in Washington, more regulations, IRS agents to wade through your medical bills, and boards of experts to tell you which treatments you may and may not have. Under Obamacare, the Department of Health and Human Services, the [FDA], Medicare, Medicaid, and the rest of the health care bureaucracy will take over your doctors office…. [Y]ou and your doctor will certainly make fewer choices about your health care, while bureaucrats will make more.” And exactly the opposite of personalized, individu
alized, custom-made health care, these large bureaucracies will make sweeping decisions for whole populations at a time.

These are all still further reasons why Obamacare needs to be repealed and replaced with free market, Patient Power health care reforms, which I have explained in previous columns. Your life may depend on it.



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