Who is innovation in the US health care system actually for?

Innovation is considered one of the American health care system’s strengths. In theory, innovation makes health care better and less expensive because it leads to new treatments and lower costs. But because innovation and new therapies exist in the context of disparities in coverage and access to care, these benefits are not felt equally across the population; innovation itself has the potential to exacerbate and deepen existing disparities.

Innovation, particularly in drug manufacturing, has become a significant priority for the private industry. In 2019, the pharmaceutical industry spent $83 billion on the research and development of new drugs. Between 2010 and 2019, 60 percent more new drugs were approved for sale than in the previous decade. And in the federal government, both sides of the political aisle rally around innovation. Members of Congress have introduced several pieces of bipartisan legislation to “accelerate promising strategies to improve the health care system and ensure patients have access to cutting edge innovation.”

However, innovation in the context of American exceptionalism means that its benefits only flow to those already privileged by the system; like all other parts of the health care system, innovation is only accessible to those who can afford it.

In the US, people are at the mercy of their insurers or public programs (if they have coverage). Consequently, the regulatory approval of a new innovative product doesn’t guarantee its access.

Research has shown that there is significant variation in commercial health plan’s coverage decisions for specialty drugs, which have been touted as some of the greatest achievements in health care innovation (in recent years, more than half of the novel drugs approved by the Food and Drug Administration [FDA] have been specialty drugs). Not all plans cover these drugs equally — some plans don’t cover these medications at all, while others have more restrictive coverage.

Moreover, like all things in the US health care system, access to innovation is severely restricted for certain groups of people. Coverage for innovative therapies is even more limited for people in public insurance programs.

In the Medicare program, innovative treatment for people with end stage renal disease (ESRD) — a disease that disproportionately affects people of color — is a great example. In August 2021, the FDA approved a new drug called Korsuva to treat ESRD-related severe chronic itching. But Korsuva falls outside Medicare’s existing bundled payment for ESRD-related care.

There is a special mechanism to guarantee access to it for two years, but, after that, Medicare can choose not to cover it. It’s likely that Medicare will not choose to permanently add Korsuva to its ESRD bundled payment because there already are covered anti-itching medications (which are ineffective against ESRD-related severe chronic itching). With an annual cost of $17,000, it’s unlikely that individual dialysis centers will purchase and provide the therapy on their own, leaving patients with no good options.

People with Medicaid coverage also face more restricted access to innovative therapies that are ostensibly designed to help them specifically. Coverage (or lack thereof) for innovative treatment for people with hepatitis C virus (HCV) — which disproportionately affects Black people and people in prison — clearly underscores this problem.

People with Medicaid coverage face significantly higher rates of HCV. There are incredibly effective treatments available to treat people with HCV, but the costs of these treatments are prohibitively high (some manufacturers have priced standard treatment courses at $84,000). While some states have worked to ensure access to HCV treatment for people with Medicaid, access is severely restricted, because people have to meet onerous prior authorization requirements (in most states) and strict criteria in order to gain coverage. This has led to an increased risk of mortality among people with HCV who have Medicaid coverage, compared to those with private insurance.

And for people without insurance, access to innovation is oftentimes out of reach. Some drug manufacturers have programs that make some of their products accessible to those without insurance, but new medications are (at least initially) priced in ways that severely limit access.

When life-altering therapies are available, but largely out of reach for certain groups of people, it’s worth considering who innovation actually serves. For everyone to reap the benefits of innovation, it’s critical to consider who our health care system is designed to work for (and who it isn’t). Until then, innovation will improve the health and lives of some, while being largely out of reach to others.

Research for this piece was supported by Arnold Ventures.

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