The MedTech Europe blog

The narrow view of medtech as a cost driver refuted… again

The prevailing thought still today is that medtech is driving rising healthcare expenditure. More and more research and publications are finding this not to be the case. The medtech industry is happy to have a fair and balanced discussion on the value of its products, but to do so, everyone must look beyond tomorrow, beyond one’s own budget, and beyond one’s own disease area or institution.

Healthcare expenditure is rising indeed, but are medical technologies the driver of this trend?

Many healthcare partners I talk to who are not health economists still today seem convinced of the old adage that medtech is driving rising healthcare expenditure. And this is understandable. If you repeat a message enough times, people will start to believe it. The medtech industry has always held that this view is skewed. Healthcare expenditure is rising indeed, but are medical technologies the driver of this trend?

Putting my data where my mouth is

So naturally I was very interested in the recently published Milken Report “Healthy Savings: Medical Technology and the Economic Burden of Disease”. This report wants to answer the age-old question: does the value of medical technology outweigh its cost? If the answer is yes, this would confirm that the long-term cost savings are greater than the upfront direct cost. And more generally, it would mean that it is too narrow-focused to simply equate innovation in medtech with rising healthcare expenditure.

To answer this question, the report looks at 4 disease areas – diabetes, heart disease, musculoskeletal disease and colorectal cancer – and the technology used to treat or manage these. By conservative calculations, the report found that the annual net benefit to the US healthcare system amounted to $23.6 billion.

But more interesting are the future projections. What would happen by 2035 if we increase incentives for technological progress in medtech (both from a regulatory and a market access point of view)? And what would happen if we reduce these incentives? The report found that in scenario #1 there would be a net gain of $1.4 trillion over a 25-year period, while scenario #2 would result in a $3.4 trillion net loss over 25 years, relative to scenario #1.

The often hidden yet critical side of the equation

Coming back to the 4 cases, some technologies are indeed more costly upfront than alternative treatments. However, when taking into account the indirect impact these technologies have on the total cost of care, a completely new picture emerges whereby each of the technologies researched yielded net benefits to the healthcare system. This has been our message all along: to get a balanced and complete picture of the cost vs value of medical technology, one needs to look at the total value – clinical, economical and societal.

This research is of course US-centric and the amounts to be gained from investing in medtech would differ in Europe. Nonetheless, these findings could just as easily be applied to Europe, where diabetes, heart disease, musculoskeletal disease and colorectal cancer also place a heavy burden on the healthcare system. Moreover, European research into the relationship between rising healthcare expenditure and medtech innovation found no direct link between the two, and that looking at the upfront cost of technology alone will never give a complete view of the true value of said technology.

We are confident the evidence won’t be looked at through a “cost keyhole”, but rather through an open “value door”

The topic of assessing value is of course very vast and has many facets and points-of-view to it. That is why at this year’s MedTech Forum we will be spending a lot of time debating the value of medical technology in various sessions and workshops, from debates with payers and how they see value, all the way to workshops on the role of value in the changing procurement environment. So head on over to medtechforum.eu and register to experience first-hand what incredible value is.

Our partners in healthcare are asking industry to provide ever more evidence of the value of our products. Industry is committed to meeting these requests. In turn, we are confident the evidence won’t be looked at through a “cost keyhole”, but rather through an open “value door”.

Serge

-Serge Bernasconi Chief Executive Officer MedTech Europe, EDMA & Eucomed

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