Report: To Cut US Health Spending, Spur Development of Cost-Saving Interventions

Promoting the development of more cost-effective therapies will help cut US health spending, according to a RAND report. Image: ©

Promoting the development of more cost-effective therapies will help cut US health spending, according to a RAND report. Image: ©

Funders, policy makers, and others should work to spur the development of cost-saving therapies that would help rein in US health spending, recommends a new report from RAND.

Spending on expensive new technologies and treatments is one of the factors driving US health costs—more per capita than any other nations—and leaving individuals and families feeling the pinch of rising copays and other health-related expenses, according to the report. Curbing these costs has been identified as key to maintaining the nation’s financial health.

Most cost-cutting strategies focus on reducing use of expensive treatments that don’t add much value, but the new report says that efforts to restrain costs need to start early in the development of new treatments.

The United States spends more than $2 trillion a year on health care “and the financial incentives for innovators, investors, physicians, hospitals, and patients often lead to decisions that increase spending with little payback in terms of health improvement,” explained the study’s lead author Steven Garber, PhD, MS, in a statement.

Garber, a senior economist at RAND, and his coauthors suggest that policy tweaks are needed to create financial incentives for developing interventions that both promote health and reduce health spending. The US government might consider offering prizes for interventions that cut costs or expedite US Food and Drug Administration approvals for such products, or investing in cost-saving interventions by purchasing their patents or creating public-private investment funds, they suggest.

They also suggest changes to the Centers for Medicare and Medicaid Services (CMS) reimbursement policies to promote use of more cost-effective interventions. For example, they suggest CMS work with the FDA to coordinate policies on approvals and coverage, and reform coverage policies to promote use of cost-saving treatments and discourage use of costly treatments that don’t improve care.

Garber and colleagues argue in the report that “spending on health care in the United States constrains our opportunities to make progress on major public and private priorities other than health, and there is substantial room for reducing spending in ways requiring only fairly small sacrifices in population health.”

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