PREFACE
This book provides a comprehensive look at the wide range of public policies that affect innovation in the medical device industry. It is a case study of the interaction between technology and policy—the relationship between private industry and government institutions. It is a tale that appeals to our most optimistic views about the ability of American know-how to diminish pain and suffering. It is also the story of technological failures and disappointments, a story that reveals the strengths and weaknesses of America's public and private institutions. Because we all live and will probably die surrounded by medical devices, the consequences of this interaction between government and business affect the health care choices that we as patients will have in the future.
The products of the medical device industry are probably more familiar to readers than the term medical device might convey. There is considerable popular interest in such innovations as the controversial intrauterine device (IUD), lithotripsy machines that crush kidney stones without surgery, angioplasty performed with lasers that remove plaque deposits from coronary arteries, and life-support systems for premature infants, to name only a few of the over 3,500 different products on the market.
Despite the importance of medical device innovations, the interrelationship of the industry to government policy is neither well studied nor well understood. Indeed, knowledge of the device industry has not expanded as rapidly as its relative importance to health care. There are good and useful data and analyses, but they are scattered across many fields or cover only a limited amount of the story told here. There is extensive literature on innovation, but it often diminishes or ignores the impact of public policy.[1]
An excellent example is the recent work by Manuel Tratjenberg, Economic Analysis of Product Innovation: The Case of CT Scanners (Cambridge: Harvard University Press, 1990). In this work, the author uses the CT scan to quantify and analyze the notion of product innovation. However, he devotes only a scant four pages to the regulatory environment.
There are excellent studies of particular public institutions, upon which I have relied, but they do not focus exclusively on medical devices.[2]For work on the FDA, see Peter Temin, Taking Your Medicine: Drug Regulation in the United States (Cambridge: Harvard University Press, 1980); and Richard A. Merrill and Peter Barton Hutt, Food and Drug Law (Mineola, N.Y.: Foundation Press, 1980). For the National Institutes of Health, see Victoria A. Harden, Inventing the NIH: Federal Biomedical Research Policy 1887-1937 (Baltimore: Johns Hopkins University Press, 1976); and Steven P. Strickland, Politics, Science, and Dread Disease (Cambridge: Harvard University Press, 1972). Louise B. Russell, Medicare's New Hospital Payment System: Is It Working? (Washington, D.C.: The Brookings Institution, 1989). These references are illustrative of the work in the field. More complete citations accompany the subsequent chapters.
There are also excellent casestudies of individual medical device technologies, including kidney dialysis, artificial organs, and the artificial heart.[3]
Richard A. Rettig, "Lessons Learned from the End-Stage Renal Disease Experience," in R. H. Egdahl and Paul M. Gertman, eds., Technology and the Quality of Health Care (Germantown, Md.: Aspen Systems, 1978). Alonzo Plough, Borrowed Time: Artificial Organs and the Politics of Extending Lives (Philadelphia: Temple University Press, 1986). Natalie Davis Spingarn, Heartbeat: The Politics of Health Research (Washington, D.C.: Robert B. Luce, 1976).
Much of the groundwork for this book has been laid by the technical studies of the Office of Technology Assessment, a research division of the U.S. Congress.[4]
U.S. Congress, Office of Technology Assessment, Federal Policies and the Medical Devices Industry (Washington, D.C.: GPO, October 1984) and Medical Technology and the Costs of the Medicare Program (Washington, D.C.: GPO, July 1984). Other government studies of importance, including reports and investigations by the General Accounting Office, are cited in subsequent chapters.
Health policy analysts have examined important aspects of the medical device industry, and my debt to them is gratefully acknowledged.[5]See, for example, Karen E. Ekelman, ed., New Medical Devices: Factors Influencing Invention, Development, and Use (Washington, D.C.: National Academy Press, 1988); and H. David Banta, "Major Issues Facing Biomedical Innovation," in Edward B. Roberts, ed., Biomedical Innovation (Cambridge: MIT Press, 1981).
The extensive citations throughout this book testify to the serious scholarship that is relevant to an understanding of the issues addressed.My aim is to provide a more comprehensive overview of the interaction of public policy and innovation than is currently available. I have been interested in medical device technology and policy for well over a decade, and sections of this book draw on my previous work.[6]
See, for example, Susan Bartlett Foote, "Loops and Loopholes: Hazardous Device Regulation under the 1976 Medical Device Amendments to the Food, Drug, and Cosmetics Act," Ecology Law Quarterly 7 (1978): 101-135; "Administrative Preemption: An Experiment in Regulatory Federalism," Virginia Law Review 70 (1984): 1429-1466; "From Crutches to CT Scans: Business-Government Relations and Medical Product Innovation," in James E. Post, ed., Research in Corporate Social Performance and Policy 8 (Greenwich, Conn.: JAI Press, 1986), 3-28; "Coexistence, Conflict, Cooperation: Public Policies toward Medical Devices," Journal of Health Politics, Policy and Law 11 (1986): 501-523; "Assessing Medical Technology Assessment: Past, Present, and Future," Milbank Quarterly 65 (1987): 59-80; "Product Liability and Medical Device Regulation: Proposal for Reform," in Karen E. Ekelman, ed., New Medical Devices: Factors Influencing Invention, Development, and Use (Washington, D.C.: National Academy Press, 1988), 73-92; and "Selling American Medical Equipment in Japan," California Management Review 31 (1989): 146-161.
I hope to do for medical devices what Paul Starr accomplished for the medical profession, Charles Rosenberg and Rosemary Stevens have done for hospitals, and Henry Grabowski has contributed to our understanding of the pharmaceutical industry.[7]Paul Starr, The Social Transformation of American Medicine (New York: Basic Books, 1982); Charles E. Rosenberg, The Care of Strangers: The Rise of America's Hospital System (New York: Basic Books, 1987); Rosemary Stevens, In Sickness and in Wealth, American Hospitals in the Twenty-First Century (New York: Basic Books, 1989); and Henry Grabowski and J. M. Vernon, The Regulation of Pharmaceuticals: Balancing the Benefits and Risks (Washington, D.C.: American Enterprise Institute, 1983). See also Grabowski, Drug Regulation and Innovation: Empirical Evidence and Policy Options (Washington, D.C.: American Enterprise Institute, 1976). The pharmaceutical industry has been well studied. See also Jonathan Liebernau, Medical Science and Medical Industry: The Formation of the American Pharmaceutical Industry (Baltimore: Johns Hopkins University Press, 1987).
A formidable task indeed!The discussion is accessible to all readers interested in medical technology and health policy regardless of training or expertise. Too often, the temptation among academics is to speak only to their own kind, communicating in the shorthand of their scholarly disciplines. Such a self-protective ploy is not possible here because of the wide range of issues and the breadth of the potential audience. The challenge, which I hope has been met, is to tell the story without cloaking the message in unnecessary technical jargon.
This book is also designed to add to the more specialized knowledge of experts. These readers may benefit from exposure to areas of policy that their own work does not address. For example, the analyst who spends his days implementing Medicare policy at the Health Care Financing Administration in Washington (HCFA) may not realize the relevance of product liability or federal regulation to the very innovations he assesses for payment or coverage purposes. The same is true for the physician who may know much about certain medical devices but little about the role of government in determining their cost and availability and for the product manager who may see the government only as a barrier to her marketing plan.
Students of business-government relations will find that the medical device industry provides an interesting case study of policy proliferation problems that affect other sectors of the economy as well. Extensive chapter references should help all readers pursue particular issues in greater depth.
In writing this book, I personally encountered the negative and the positive aspects of medical devices. I brought the manuscript along when I took my mother for radiation treatments during her valiant, but losing, battle with lung cancer. There seemed no end to the technological fixes that offered false hopes and that only prolonged pain and suffering. I saw firsthand the role of technology as a substitute for the caring side of medicine. On a more optimistic note, I brought this manuscript to the hospital when I underwent two operations on my own back. These procedures were successful in large part because of the advanced state of diagnostic imaging and the whole range of technological innovations in surgical technique. While this form of field research is one I do not care to repeat, I acquired new respect for these costly, yet effective and beneficial, technological advances.
Of course, my exposure to medical technology is not unique. All of us have felt the impact of the health care system and its technology on ourselves and our families. The innovations and the institutions discussed in this book inevitably touch us all.
No book is complete without acknowledgments. I am indebted to colleagues in the Business and Public Policy Group at the Walter A. Haas School of Business at the University of California, Berkeley, including Budd Cheit, Edwin Epstein, Robert Harris, David Irons, David Mowery, Christine Rosen, and David Vogel, who commented on various drafts. Others at Berkeley provided useful critique and support, including Sally Fairfax, Judy Gruber, Charles O'Reilly, and Franklin Zimring. Dr. Stephen Bongard recently of the Institute of Medicine and Dr. Peter Budetti of the George Washington University School of Medicine shared their expertise and experiences at various stages of this project.
Students of law and business at Berkeley, including Richard S. Taylor, Ann R. Shulman, Kenneth Koput, Dr. David Okuji, Dr. Michael J. Sterns, Brian Shaffer, and Emerson Tiller, provided able research assistance, and the Harris Trust at the Institute for
Governmental Studies at Berkeley and the Program in Business and Social Policy supplied funds for their support. I am also grateful to the Institute of Medicine at the National Academy of Sciences, which provided forums for thoughtful analysis and debate of important health policy issues in which I was invited to participate. Serena Joe helped with typing the manuscript and Patricia Murphy provided meticulous word processing and editorial advice.
When the urge to abandon was strongest, I was encouraged by William Lowrance of The Rockefeller University, who believed in the idea and sustained me in the early stages. I am grateful to Robert Coleman, who could always make me laugh, and to Ed Freeman of the University of Virginia, who knew there was a story to be told.
During the 1990–1991 academic year, I was fortunate to have been selected as a Robert Wood Johnson Congressional Health Policy Fellow. I extend deep appreciation to Marion Ein Lewin, the director of the fellowship, and to the five other RWJ fellows who served as colleagues, teachers, and most of all as friends. I am especially indebted to Senator Dave Durenberger and his exceptional staff, who allowed me to participate in the Senate health policy process in the first session of the 102d Congress.