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Medical Innovation: Turning Molecules Into Miracles

Wednesday February 2010


Peter Huber Senior Fellow, Manhattan Institute

Presenter: Paul Howard, Senior Fellow, Manhattan Institute
Panelists: Tomas Philipson, University of Chicago; Arthur Daemmrich, Harvard Business School; Dr. Daniel P. Petrylak, Columbia University Medical Center; Alex Azar, Eli Lilly & Co.
Speaker: Peter Huber, Senior Fellow, Manhattan Institute

How to pay America's $2.2 trillion health care tab, while also extending affordable coverage to the uninsured, is the question at the core of the current debate in Washington. But an important possible solution is being ignored. The innovation pipeline bringing new medicines to market has the potential to reduce overall health-care spending by replacing expensive physician's services and costly hospital beds with relatively cheap molecules that treat, prevent, or cure illnesses.

Medical innovation doesn't just "happen." Rather, it is the result of a market-driven process whereby companies risk scarce capital in the search for new cures. These companies make many bets, hoping that just one will pay off for both patients and profits. However, as government's share of health-care spending rises, policymakers face a powerful temptation to rein in spending by imposing restrictions on drug pricing and marketing. These restrictions reduce the cost of cures for today's patients, but they do so at the expense of future generations, who will suffer from a lack of investment in innovation.