Responses of Medical R&D to Changing
Economic Incentives:
Implications for the Future of Health Care Costs and Quality
David
Dranove and Burton A. Weisbrod
Abstract
With a growing emphasis on cost containment, health
care providers must increasingly consider costs whenever they adopt
new technologies. This has implications for the kinds of technologies
that medical R&D firms develop. We report the results of a survey
of 58 medical R&D firms to determine how, if at all, medical research
portfolios are changing. Compared with 1990, we find that medical
R&D firms today place a significantly greater emphasis on developing
products that will lower costs. At the same time, their emphasis
has switched from "me-too" technologies to more innovative
technologies offering the promise of major quality improvement.
David Dranove, Department
of Management and Strategy, Kellogg Graduate School of Management
Burton A. Weisbrod, Department of Economics, Northwestern
University
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