Just wanted to add to my post yesterday with a graphical explanation. I’m trying to run out of the door physical therapy, so I’ll try and make it quick. This is what the industry supposes:
In this world, the marginal value of dollars invested in innovation is fairly linear. More dollars equal more innovation, and by the same token, less dollars in investment mean less innovation. Here’s what I’m saying things look like:
In this world — which I believe is the one we inhabit — you reach a steeply declining level of marginal value for dollars invested in innovation. In other words, once you reach a critical point you can’t just throw money at cancer and develop a cure. Given the amount of money on treatments that don’t improve outcomes, it seems to me to be a reasonable assumption that we are somewhere on the very steep part of the curve. As such, marginal reductions in investment will not be met by a commensurately large drop in medical innovation.
And of course, none of this even deals with issues of demand.