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New Medical Devices: Invention, Development, and Use (1988)

Chapter: Perspectives of Industry, the Physician, and Government

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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Page 144
Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Page 145
Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Page 146
Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Suggested Citation:"Perspectives of Industry, the Physician, and Government." National Academy of Engineering and Institute of Medicine. 1988. New Medical Devices: Invention, Development, and Use. Washington, DC: The National Academies Press. doi: 10.17226/1099.
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Perspectives of Industry, the Physician, and Government Responsibility, Risk, and Informed Consent PETER F. CARPENTER Three elements hold the key to the survival and continued success of the biomedical industry in the United States: (1) the way risks are dealt with, both risks of using specific biomedical products and risks associated with innovation of biomedical products in general; (2) the responsibilities of manufacturers, regulators, and users of medical devices and health care products; and (3) the need for the informed consent of the medical device user. HOW WE DEAL WITH RISK The problems of product liability in our industry specifically, those relating to the tort system have attracted much attention. Unfortu- nately, because tort law is concerned only with segments of the health care system that fail, our attention has been inappropriately diverted from the much more important objective of achieving success. The overall quality of medical care and biomedical products has not decreased; significant advances in the pharmaceutical, medical device, and health care arenas continue to occur. Each advance, however, brings with it new risks. Ignoring or refusing to acknowledge these risks as challenges would severely impair our ability to continue to innovate within the health care environment. The views expressed in this paper are those of the author and not necessarily those of ALZA Corporation or of the biomedical products industry. 138

PERSPECTIVES OF INDUSTRY, TlIE PHYSICIAN, AND GOVERNMENT 139 We must first acknowledge the impossibility of totally eliminating risk. As van Wartburg (1984) observed: A fact which is often overlooked is that although the use of certain agents may involve a risk, their non-use is also fraught with problems. While we run the risk of breathing in toxic substances with the air, we are faced with the certain prospect of suffocation if we decide to stop breathing. Because the biomedical industry deals with issues that affect life and death, we are subject to close scrutiny by the public. Therefore, we must seek creative ways to educate the public and users of our products about risks and benefits. Although risk/benefit assessment has been used extensively in the evaluation of drugs and medical devices, much remains to be done to ensure a better public under- standing of the delicate balance between risks and benefits (Carpenter, 1983~. For example, if manufacturers more readily acknowledged the possibility of failure of a medical device, then all parties would be better informed and less likely to be surprised when a failure occurs. Manufacturers can also work to minimize the possibility of product failure both by innovative design and labeling. As organizations and individuals who have voluntarily chosen to participate in the medical marketplace in pursuit of profit, we can never forget that our first responsibility is to those who use our products. We must aim to enhance the quality of their care and to do them no avoidable harm. RESPONSIBILITIES IN THE HEALTH CARE ARENA Every participant in the health care arena- manufacturer, doctor, patient, regulator, lawyer, and judge—has special responsibilities. For the United States to retain its position as one of the most medically advanced countries in the world, it is essential that we not only understand but also take these responsibilities seriously. The responsibilities of the developer and manufacturer are to develop, test, manufacture, and market products that are safe and effective. An important goal during the research and design phase is to reduce unavoidable risks to a minimum. During testing, developers and manufacturers work to expose any previously unknown risks and to reduce them. At the premarket phase, a new biomedical product is usually tested within a small and well-defined set of healthy volunteers and patient subjects. When approved, the product is marketed with a package insert which identifies the product, its indications for use, its benefits, and the known risks associated with its use. At this point, with necessarily limited experience, the known serious

140 HOW TRENDS WILL INTERACT risks are generally few. However, as the product is prescribed for and used by a much larger, more varied, and less controlled patient population, unexpected developments may occur, and manufacturers continue to learn. What is learned about any serious new risk should quickly be reflected in revised labeling. The process of label revision in itself creates an additional legal risk for manufacturers by flagging new concerns that attract the attention of product liability lawyers. At least one major company has gone bankrupt because revision of the label on one of its minor products set the stage for a liability disaster. We must find a way to reduce the adverse impact of this phenomenon so that manufacturers are not discouraged from making timely changes in their labeling. In communicating all the known benefits and risks to the doctor, we must make clear what type of patient is an appropriate candidate for the product. We have a responsibility not to promote or encourage its use for patients or indications for which it has not been tested or for which the risks outweigh the benefits. It is the doctor's responsibility to learn everything he or she can about the product. This involves obtaining and becoming familiar with information from the manufacturer, as well as questioning other doctors to learn about their experiences. When prescribing the product, the physician has a crucial responsibility to communicate the potential benefits and risks to the patient. Patients must be told of the possible side effects so that they know what to be alert for. The informed patient, after leaving the doctor's office, has respon- sibility for the proper administration and care of the product, as well as for being alert to possible side effects or product failure. If side effects or product failure occurs, the patient is responsible for seeking medical advice quickly. Follow-up, especially during the initial marketing of a new product, is essential. The doctor, assisted by the patient, must take responsibility for alerting the manufacturer and the Food and Drug Administration (FDA) to any problems experienced with the product. The United States is behind many other countries in requiring follow- up reporting. Although manufacturers face strict reporting require- ments, they must depend on voluntary reports from doctors to alert them or the FDA to problems that patients experience with biomedical products. The United Kingdom's more formalized yellow-card program facilitates adverse reaction reporting by physicians. Although a similar program has been considered here, little progress has been made. Such a program would be in the best interests of both patients and manufacturers. Good, voluntary, postmarketing surveillance programs may well be the only protection against inappropriate product with-

PERSPECTIVES OF INDUSTRY, THE PHYSICIAN, AND GOVERNMENT 141 drawals. Such withdrawals will continue to occur in the absence of adequate in-use information. In addition, properly designed postmar- keting surveillance programs could provide a competitive advantage for U.S. manufacturing. INFORMED CONSENT Jonsen et al. (1982) defines informed consent particularly well: Informed consent is defined as the willing and uncoerced acceptance of a medical intervention by a patient after adequate disclosure by the physician of the nature of the intervention, its risks and benefits, as well as of the alternatives with their risks and benefits. There is a strong tradition in clinical trials and for many surgical procedures of making sure that the participants or patients are well informed about the risks and benefits of the planned medical interven- tion, and that the participant has freely elected to accept these risks. For some reason this tradition has, in general, not carried over to the postapproval use of most biomedical products. Clearly, such proce- dures enhance patients' autonomy (Faden and Beauchamp, 1986) by increasing their ability to voluntarily accept or reject risks on a rational basis. It is thus difficult to understand why informed consent is any less important for a patient than for a clinical trial subject. We live in an age and a country where patients are increasingly interested in and knowledgeable about medical care. Over the past decade, we have seen a dramatic increase in news coverage of medical developments. Gone are the days when patients gave doctors carte Blanche to diagnose and treat their ailments. Today, patients are asking informed questions and demanding answers. Perhaps to some physi- cians, patients who question every aspect of their treatment are an annoyance, but we must remember that patients have both the right and the responsibility to understand their treatment. Too often we forget that most patients are capable of making knowledgeable decisions. We should take advantage of their increased interest in their medical care to ensure that they are fully aware of risks and benefits. Such awareness should enable a patient to help determine whether he or she is an appropriate candidate for the use of a particular medical product. Only when the patient or physician believes that the patient has been avoidably harmed by a product should the question of legal liability enter the picture. Today, lawyers have a responsibility not only to their clients but also to the future of health care in this country. Before filing a lawsuit, a lawyer must be relentless in determining

142 HOW TRENDS WILL INTERACT probable fault. While I acknowledge lawyers' primary interests must be the protection of their clients, they must also realize that a decision to pursue an inappropriate product liability case in court may have ramifications for the long-term provision of quality health care. The following questions may be appropriately asked: Did the manufacturer mislead the doctor by purposefully concealing a known risk? Did the doctor neglect his or her responsibility to alert the patient to possible serious side effects? Did the patient, having been advised what to look out for, wait too long before seeking medical attention? Today, manufacturers are caught in a bind. We must pursue inno- vation in order to improve medical treatment inventing new devices, developing new drugs, and seeking new uses for and forms of delivery of old drugs. Yet, the threat of product liability hangs over any innovation. This threat provides a powerful motivation for doing everything we can to ensure that medical products and treatments are safe. But that reason should never be the only—or the most important- reason for our commitment to excellence. Let me illustrate this dichotomy through our recent experience at ALZA Corporation. ALZA is manufacturing and marketing the only intrauterine device (IUD) remaining on the U.S. market. Whether the other manufacturers overreacted by withdrawing their products is a question I cannot answer. I can say, however, that ALZA did not easily reach its decision to keep its IUD on the market. We immediately recognized that sales of ALZA's IUD, which then had only a very small market share, could dramatically increase. We were concerned that inappropriate use might accompany a marked and uncontrolled increase in use, so our first action was to immediately limit the availability of the IUD Progestasert System to only those physicians who were currently prescribing it, while we assessed the risk factors involved in expanding use of the Progestasert IUD. For example, ALZA conducted detailed reassessment of the new legal risks created by the changed marketing environment. The Progestasert system is a hormone-releasing IUD that is different in a number of respects from copper-releasing or inert IUDs. When used properly, it is a safe and effective form of birth control. As with all other birth control methods, there are some women for whom the IUD is not appropriate- but does that mean that the option of using an IUD should be taken away from all women, particularly if the IUD has been well designed, tested, manufactured, and labeled to assist proper use? As part of our decision-making process, ALZA representatives spoke to the people who would be directly and indirectly impacted by our decision. We spoke to women, doctors, consumer advocates, women's health groups, family planning advisers, lawyers, and insur-

PERSPECTIVES OF INDUSTRY, THE PHYSICIAN, ED GOVERNMENT 143 ance experts. The objective of this broad consultative process was to increase our understanding of the attitudes and preferences of the groups that our decision would affect. At the same time it provided us with an opportunity to discuss with them some of the considerations involved. To get a balanced perspective, ALZA representatives spoke not only with proponents of birth control but also with individuals and groups who historically have been critical of our product or of IUDs generally. It did not take long to determine that women and their physicians wanted the option of an IU~provided that it was properly presented and accurately labeled and that they were given the opportunity to make an informed choice. For example, among women unable to use the birth control pill, the total elimination of the IUD from the market would increase the possibility of unwanted pregnancies—pregnancy is not riskfree. While ALZA realized that keeping its product on the market could be risking lawsuits, it also felt that arbitrarily withdrawing would simply be irresponsible. Having made the decision to keep our IUD on the market, we were, of course, concerned that the product be used only by appropriate women. And we decided we could help promote this aim further by providing the doctor and patient with updated and expanded infor- mation. To do this we developed unusually comprehensive labeling, including an extensive patient information leaflet (Physicians' Desk Reference, 1988, pp. 59~596) modeled on the informed consent used for clinical trials. The leaflet informs the prospective user in detail of known risks and efficacy of the IUD; its format requires the patient's initials at the end of each section to indicate that she has read and understood the information and has discussed her questions with the physician. Although the patient and her doctor may need 30 minutes to go through the leaflet, this is a small investment of time for an important medical . · . Recision. So, for the time being at least, women in the United States still have the option of using an IUD. And, equally importantly, they receive the information necessary to make an informed decision about its use (Medawar, 1986~. A PERSPECTIVE ON FUTURE CHALLENGES Although the process of deciding whether or not to keep the Progestasert system on the market was long and difficult, I believe we at ALZA have come away with a more enlightened view of the challenges now facing the medical products industry and health care providers. That industry needs to better understand that it does more

144 HOW TRENDS WILL INTERACT than simply provide devices or drugs, and that its responsibility does not end when a product goes on the market. At ALZA, we believe that a biomedical product is much like a piece of computer hardware that requires software to do its job (Mintz, 19871. In the medical arena, the software is every type of information and mechanism that is produced to inform and encourage doctors and patients to use our products correctly. Packaging provides an example, such as the calendar pack used for birth control pills, which is designed to assist patient compliance. At ALZA, once we determine that a medical product is safe and effective in controlled clinical trials, we ask how we can support its safe and appropriate postapproval use with the proper software. Throughout the medical device industry, such biomedical product software deserves much more attention. It is an area clearly ripe for innovation and as deserving of research investment as the hardware component, which has dominated the industry's research and devel- opment programs to date. In summary, I believe we must dramatically increase public under- standing of the inherent risks involved in the use of biomedical products and in biomedical innovation. Only thus can we ensure that all of us are not inappropriately denied the benefits of such products and innovation. I am not advocating new regulatory solutions. Instead, I believe that smart companies will develop their own creative and innovative software solutions. While the problems with our tort system may take years maybe even decades to solve, those of us in the medical products industry can act now. Better product design and testing, better understanding of unavoidable risks, better communication with our product users in the spins of informed consent regarding the risks, and more timely and compassionate response in the event of unavoid- able injury will substantially reduce the opportunities for the tort system to intervene or impede innovation. The biomedical industry, however, cannot solve all the problems. We must all take it upon ourselves manufacturers, doctors, lawyers, and patients - to recognize our individual risks and responsibilities and to respond more creatively to the challenges that they pose. We should do it now. REFERENCES Carpenter, P. F. 1983. Understanding risk. Medical Device and Diagnostic Industry 5(6):2~26. Faden, R. R., and T. L. Beauchamp. 1986. P. 8 in Informed Consent. New York: Oxford University Press.

PERSPECTIVES OF INDUSTRY, THE PHYSICIAN, kD GOVERNMENT 145 Jonsen, A. R., M. Siegler, and W. J. Winslade. 1982. Clinical Ethics: A Practical Approach to Ethical Decisions in Clinical Medicine. New York: Macmillan. Medawar, C. 1986. No news, good news? Scrip No. 1162 (December 10):18. Mintz, M. March 15, 1987. The Washington Post. H6. Physicians' Desk Reference. 1988. Oradell, N.J.: Medical Economics Company, Inc. Von Wartburg, W. P. 1984. Drugs and the perception of nsks. Swiss Pharma 6(1 la):21- 23. The Perspective of the Medical Device Industry FRANK E. SAMUEL, JR. TEN STAGES IN THE INNOVATION OF MEDICAL DEVICES There are ten stages through which medical innovation should flow if we are going to have the highest degree of patient care. Cutting across these stages, there are six factors that can affect the speed and efficiency of the whole process. My thesis is that we need an integrated approach to policies affecting the invention, development, and use of medical technology. We must not be misled into thinking that simply permitting motivated, self- confident inventors to get a new product into actual use will guarantee success. A fertile invention and prompt development of the product are not enough to assure the best clinical use and appropriate financial treatment for a new medical device. I agree with Edward Roberts (this volume) who said much innovation in health care is neither radical nor research-based, but rather incremental and engineering/develop- ment-based. Such innovation takes place every day, through interac- tions among companies, users, and others. We cannot understand the totality of that process by relying on details surrounding the signal inventions of individuals such as William Greatbatch or Edwin White- head. I also want to point out that it is very difficult to generalize in a useful way about medical technology. Observations based on one technology—even if they are correct may not apply to pacemakers, patient monitoring equipment, disposable supplies, or other products. I will only briefly mention the first four stages because they are relatively unaffected by policy decisions of the federal government. These include, first, the discovery of new knowledge; second, aware- ness of that new knowledge by researchers, clinicians, engineers, and others who can translate the new knowledge into the third stage,

146 HOW TRENDS WILL INTERACT invention of a new product; and fourth, patenting the new product. We cannot worry very effectively about the discovery of new knowl- edge, the invention of new products, or the patenting of new products because I believe that it is the obsessive personal commitment to solving problems by inventing new solutions that drives these steps in the process. I do not believe there is much we can do to encourage that commitment except to continue to protect the values of originality and creativity that our society considers important. With respect to the second stage, however, there is something to be done. We can work to increase awareness of new knowledge among all people who might play a role in either inventing a new product or in incrementally improving one that is already on the marketplace. The more interchange there is between people doing research and people who have interests in products derived from research the better. As cost constraints continue to be imposed on the health care system, we should increasingly be concerned with the effectiveness and the efficiency of the process by which new technology is transferred from the inventor/scientist to the manufacturer. The fifth stage in the innovation process is the development of a replicable product, moving from a prototype to a product that can be manufactured in 10, 15, or 100,000 copies; sent into the field; used in institutions by a wide variety of people; and perform the way it was intended to perform. That step in innovation is extremely important; yet it is difficult, time-consuming, and unpredictable. It is a step that policymakers are inclined to ignore, believing that all it takes is a workable prototype to be able to translate a new technology into dependable patient care. In the sixth stage, a clinical trial is conducted, the results of which will be used to acquire Food and Drug Administration (FDA) approval of the new product. These stages, however, are neither rigidly sequential nor performed in mutually exclusive time frames. They are not neat. The development of a replicable medical device and the conduct of a clinical trial may go hand in hand, and it is important to remember that much interactive development of new devices takes place. The seventh stage in the innovation process is obtaining FDA approval based on the results of the clinical trial and other relevant information. Once FDA approval has been obtained, coverage and payment decisions must be made by various health care insurance and govern- ment programs. This is the eighth step. Although we are often preoccupied with federal programs such as Medicare, we must remem- ber that Medicare pays only 40 percent of hospital costs; 60 percent is paid by Blue Cross and other private insurers. Here, therefore,

PERSPECTIVES OF INDUSTRY, THE PHYSICIAN, AND GOVERNMENT 147 nongovernmental decisions, whether or not they are made thoughtfully or by default, are at least as important as governmental decisions. It is particularly unfortunate that the courts and Congress are deciding issues about the coverage of new medical technologies. There ought to be an effective nonpolitical way to adjust the systems for financing health care that take account of specific new technologies. But as Stuart Altman has explained (this volume), we may not be doing a very good job of this; if we are not, then the courts and Congress will continue to be used as agents of last resort. The ninth and tenth stages are generally underemphasized, but I believe we will hear more about them in the future. Stage nine is postmarketing surveillance by the FDA, and stage ten is postcoverage . . . review by Insurance compames. Technology manufacturers have always been sensitive to the issue of postmarketing review because it sounds like additional regulatory requirements. There is already, on average, a 13-month delay after the clinical trial for new medical devices that must be approved by the FDA. Suggesting that FDA ought to do postmarketing surveillance after all this premarketing review has always seemed an additional burden for manufacturers aimed not at improving health care, but at protecting the reputation of the regulators. However, if we are going to ask for faster market introduction of certain kinds of technologies or for interim coverages for those technologies that were mentioned by Seymour Perry (this volume), then manufacturers should be willing to recognize that clinical data- based postmarketing surveillance may become necessary. Manufacturers must also assume that, as health care providers and third-party payers become increasingly concerned with cost-contain- ment, they will begin to look for "obsolete" medical technologies, including both procedures and products. To this end, stages nine and ten can play an important role in determining the appropriate use of medical technologies. These, then, are the ten stages in the innovation of new medical devices. Innovative products do not move consecutively or with uniformity of speed through those stages, of course. But at each stage, different actors and factors play key roles; we would lose some important distinctions if we attempt to compress the innovative process into fewer stages. FACTORS INFLUENCING THE TEN STAGES IN MEDICAL DEVICE INNOVATION An issue that cuts across several of these stages is professional and patient acceptance of new medical technologies. Professional accep-

148 HOW TRENDS WILL INTERACT lance in particular used to be the major factor necessary for successful innovation in health care; today, however, it is one of many important factors. Both product liability and issues of corporate research and devel- opment taxation are also important. The suggestion made by Susan Bartlett Foote (this volume) to make compensation for injury fair and more predictable by separating compensation decisions from issues of generalized product liability was very constructive. International competition in medical devices is important, and it affects different segments of the industry to different extents. For example, international competition in capital equipment manufacturing is much greater than it is for supplies used in hospitals. Ethical considerations in health care, particularly with respect to patients who have terminal diseases or who are otherwise vulnerable, will become increasingly important. The final factor that bears on several stages of medical innovation is the availability of funds for research, product development, regulation, and services. In the area of services, payments for medical care provided to the uninsured, for long-term care, and for some new procedures that can be performed outside hospitals are currently underfunded. The Health Industry Manufacturers Association (HIMA) has paid much attention to the availability of funds for regulation in the last couple of years, because regulation delayed is product improvement delayed and patient care improvement denied. The spirit of our health care system is to improve delivered care. We must therefore have a regulatory process that dependably, reliably, and credibly enables and promotes that process. The regulatory process for medical devices should not just deter bad things from happening, it should have the positive value of ensuring that better things continue to happen. That does not necessarily mean that it is desirable that devices go through the ADA approval process in 5 or 6 months instead of 12 months. The point is that the movement of devices through the system should be both swift and credible. The public benefits from having such a regulatory process; industry also benefits from having a credible process. It does the industry no good to have medical devices reviewed for safety and efficacy by regulators who are poorly trained. A regulatory agency should be staffed with professionals who are cog- nizant of the state of the art of medical technologies. Both the public and the medical devices industry will rely on decisions made by such an agency, but we are not at that point. To support such changes, HIMA has recommended higher appro- priations for the FDA. HIMA's argument, stated again, is that regu- lation delayed is product improvements delayed and patient care

PERSPECTIVES OF INDUSTRY, THE PHYSICIAN, AND GOVERNMENT 149 improvements denied. HIMA's position reinforces and supports the fundamental impulse of health care, which is not only to avoid bad outcomes but to make things better. Are any of these ten stages or any of the factors influencing them becoming simpler, less expensive, or more predictable? No. In general, the overall process is becoming more expensive and less predictable, although it is hard to pinpoint exactly what stages and factors are responsible for this change. The process is becoming more expensive and less predictable, in part because we have more government involvement in the health care system. Also, insurance systems are, for the first time, taking a role in technology assessment, and in part, innovation of medical devices is becoming more complicated and less predictable because many medical devices are interacting in a more complex way with the human body. Such a change may require a level of expertise that is difficult to achieve and results that are difficult to regulate. SOME SUGGESTIONS FOR CHANGE First, we need to explore ways to enhance the transfer of new technology. The National Academy of Engineering and the Institute of Medicine should continue to work together to enhance communi- cation about medical device innovation across disciplinary lines. Leo Thomas (this volume) emphasizes the value of an interdisciplinary approach, and I believe he is correct. New medical technologies will come from advances in materials science, electronics, and related activities as well as from biological and clinical research. A second important area is user education. If we want to have a quick impact on the quality of care in the United States, we should put aside changes in products. Instead, we should concentrate on ensuring that the products are used the way they were intended to be used. Whether health care providers follow reasonable standards in reuse of disposable products or acceptable procedures for calibrating anesthesiology equipment, the single greatest opportunity for short- term improvements in patient care remains greater education for the users of medical devices. No single entity or group can achieve that goal. Professional groups, hospital administrators, and biomedical engineers must all be involved. Clearly, device manufacturers, the FDA, and the Health Care Financing Administration are involved. And not least important, the federal government should designate a modest amount of money for training or retraining health care providers. My third recommendation concerns product liability. Some of the suggestions made by Susan Bartlett Foote (this volume) are construc-

150 HOW TRENDS WILL INTERACT five and appropriately focused on health care. Instead of dealing separately with professional, hospital, and other facility malpractice and product liability for medical device manufacturers that grow out of a single incident of injury to a patient, all claims should be considered together, not piecemeal. Fourth, we all need to think seriously about what quality health care means. In part, it is a question of data collection; in part, it is a question of coming to grips with measures of outcomes. Frankly, the notion of quality has become devalued and empty of meaning in policy circles because it is seen as a buzz word that providers and suppliers use to protect themselves. But quality does not mean whatever we want it to mean. It cannot mean more tax shelters for physicians, more diversification for hospitals, and more expensive product refinements for manufacturers. Quality must be given meaning in relation to patient care. Fifth, I believe we are facing a significant issue in funding for clinical trials. For 20 years, Medicare has taken the position that it has no responsibility to fund clinical trials for new drugs or devices. Experi- mental, investigational technologies are not "reasonable and neces- sary." This means that Medicare takes no responsibility for improving the health of Medicare beneficiaries. Now, this position is not a question of law; the Medicare statute does not require it. I think that is an unreasonable policy, and one that the Institute of Medicine should explore. Sixth, and last, we need to look at the technology of long-term care: where it is delivered, who delivers it, quality controls for long-term care, and so forth. In an era dominated by AIDS and an aging population, it is a topic that is going to demand the best from all of us. Prospective Payment HARVEY V. FINEBERG What is, perhaps, most important about the Prospective Payment System is that prospective payment represents a more centrally controllable pattern of payment for health care services than did cost- based reimbursement. As we consider moving from the Prospective Payment System, which is payment based on episode of illness, to payment systems

PERSPECTIVES OF INDUSTRY, THE PHYSICIAN, AND GOVERNMENT 151 such as capitation and other systems of managed care, the effect will be to further enhance centralized control of such decisions as how much is going to be spent and where it is going to be spent. Centralization of such decisions may have an impact on the availability of new medical devices. What the current system introduces is uncertainty about those effects. One of the key features that needs to be incorporated into the thinking of the Prospective Payment Commission, Medicare program administrators, and all those who have some control over the payment system, is increasing the assurance about the way in which payments will be made over a period of time. Such assurance will enhance stability in planning and projection throughout the whole system. We will inevitably see an increasing investment in health care in this country. The pressures of an aging population, of rising income in the population, and of new disease problems all point in that direction. Will we be able to allocate effectively the resources that must pay for these services in this era of centralized decision making? The answer depends on how much money we put into the Prospective Payment System and how it is directed to be spent. In the future, physicians increasingly will be subject to the incentives of prospective payment. The growth in prepayment for services and in the number of physicians that are salaried instead of working as free-standing entrepreneurs—a trend which is almost sure to continue— alters the financial incentives that the physician sees. That, combined with the traditional role of the physician as decision maker about adoption and use of new medical devices and technologies, will have a bearing on some segments of the medical device industry over time. Today, for example, the practice of performing medical tests in the physician's office is growing at a rate of about 16 to 19 percent per year, double the rate of growth of hospital-based or independent laboratory testing. This change is partly driven by advances in tech- nology and the capacity to do more in the office. It is also driven, in part, by recent changes in reimbursement: Whereas hospital-based tests are part of a diagnosis-related group and subject to the constraints of prospective payment, office-based tests are not. The kinds of incentives that differentially affect specific segments are likely to continue and change. REGULATION AND PRODUCT LIABILITY The new tensions between the objectives of the regulatory system and the liability system that have been addressed by Susan Bartlett Foote in her contribution to this volume are very important. The key

152 HOW TRENDS WILL INTERACT piece of information that would permit us to move toward a reasonable system for compensation, and which is missing, is information on the frequency and severity of medical events that have negative outcomes for patients. It is going to be very hard to adopt a program that automatically compensates patients for bad outcomes when we do not have good data about the frequency and severity of these outcomes. BIOMEDICAL INNOVATION Several individuals have suggested that the United States needs to have an explicit strategy to promote biomedical innovation in research, in the field, and in industry; that we do need to think about biomedical innovation systematically; and that we should be seeking ways to encourage the kind of creativity, inventiveness, and independence that seem to be at the heart of successful innovation in the past. Several approaches have been suggested: various industry/university associa- tions, the kind of small business investment program that the National Institutes of Health has started, the possibility of consortia funded or convened under government auspices, and various proposals for coordinating and integrating interagency activities within the govern- ment. At the same time, others have stressed that such early stages of creativity and innovation are characterized by individual initiative and will proceed regardless of what we do; these stages do not need to be stimulated. I propose that we have an experimental attitude toward stimulating innovation. And we should develop concrete suggestions for ways in which we retrospectively can decide what experiments have worked and what has enhanced our capacity for innovation. The net effects of the current uncertainty about future payment systems and the medical device industry act to dampen attention to and investment in medical progress. EVALUATING MEDICAL DEVICES It is important to distinguish between decisions to make available medical devices and decisions to actually use the devices. What is most important is not whether a device is good or bad once it has passed the hurdles of industry assessment and Food and Drug Admin- istration assessment, but how well it is being used in the medical community. To evaluate a device, then, it is not sensible to evaluate only the device per se, but rather to think about the system in which the device is employed. Such an evaluation must consider the particular

PERSPECTIVES OF INDUSTRY, THE PHYSICIk, kD GOVERNMENT 153 patient population subjected to the device; the particular setting in which the device is used (hospital, clinic, or home); and the providers involved (physicians, technicians, and others). The system applied to the evaluation of each device will be specific to these and other circumstances. Much of that is behind concerns over misapplication of devices or technology; not that they are good or bad, but that they may be used in varying beneficial and risky ways. For example, our own studies of computed tomography (CT) scanning at a major teaching hospital have demonstrated more than a sixfold difference in the frequency with which use of the CT scan affected treatment decisions for different classes of patients. In a recent assessment of thrombolytic treatment of patients who have a myocardial infarction, taking into consideration only the size of the infarction and how soon after the infarction the patient arrives in the emergency room, there was at least a 10-fold difference in the costs of having one more patient alive at the end of 1 year. From the point of view of physicians in practice, decisions about good technol- ogies—how they are used, when they are used, in what patients they are used are at the crux of the evaluation problem. Additionally, all evaluation is relative to some alternative. Susan Foote discussed the risks of allowing judgments about the appropri- ateness of medical devices to be made in court, and I agree that it is unlikely to be effective. But we should recognize that if those judgments are to be made by physicians and evaluators in an informed way, they must also be made relative to the alternatives. There is always the alternative of not doing anything for the patient, and there are likely to be alternative interventions for each patient. It is important to remember that having a good device and having a complete evaluation that assesses the effectiveness of that device does not guarantee that the device will be used as it has been evaluated. It takes time for good devices, properly used, to diffuse and disseminate into practice. Factors that influence diffusion and use of new devices and other medical technology raise important issues that, if properly addressed, will improve the way in which medical care is delivered and the cost sensitivity of that care. Finally, I offer a reminder. All research directed toward innovation for medical devices and, more broadly, toward innovation in health care is aimed at a future benefit. We are, in effect, deferring current consumption and current use of resources to invest in the development of improved future health care. If we keep in mind the goal of improving the health of particular patients or groups of patients in the future, it is incumbent upon us also to think broadly about the role of technology

154 HOW TRENDS WILL INTERACT in enhancing the health of people over time and strategically about how we can move our health care system in those directions. For example, there are about 15 countries that have lower infant mortality rates than the United States. What is our problem? Ounce for ounce, we do as well as any country in the world; we save more infants of low birth weight than any other country in the world. Our problem is that we have too many low-birth-weight infants. If we are going to decrease our infant mortality rate, we must think critically about how to reduce the frequency of low birth weight; this is a very different problem than how well we can keep a 550-gram infant alive. If our goal is to keep the number of people who die from heart disease at a minimum in the year 2010, how do we get to that goal? We have made remarkable progress against heart disease in the last 25 years; since the late 1960s, the incidence of heart disease as a cause of death has been steadily declining in the United States. Most of the decline is because fewer people are having heart attacks: Diet has changed; we have improved treatment of hypertension; tobacco use has declined; we have improved the care of patients after they have heart attacks. Thinking ahead, we should ask ourselves how we can take advantage of what we know today so that people who would otherwise be dead or incapacitated from heart attacks will be alive in the year 2010. A final example is the issue of injury from automobile accidents. Why do we have a problem? Because we do not yet adequately protect the occupants of automobiles, we do not have appropriate policies to deal with the problemn of driving while intoxicated, and we do not invest enough in road safety (lighted roads and better markings) to reduce the frequency of severe and disabling accidents. How Trends Will Interact: The Perspective of the Government LOUISE B. RUSSELL The government has at least four major perspectives on new medical devices in health care. First, it is a major fonder of research. Second, it is a major finances of care. Third, the government serves as guardian of the public interest; that is, it protects the safety of the public and tries to ensure fair dealing. Each of these activities is conducted through different agencies for example, financing of care through the

PERSPECTIVES OF INDUSTRY, THE PHYSICIk, kD GOVERNMENT 155 Health Care Financing Administration, financing of research through the National Institutes of Health, and guarding of the public interest through the Food and Drug Administration and the Federal Trade Commission. And there are other agencies involved in these activities. The fourth perspective of the government comes from a responsibility that encompasses all of these: The government provides a forum for the resolution of conflicting interests. The Congress and the judicial system, more than the executive branch agencies, provide this forum. Private interests are reconciled when private conflicts are brought to the government's attention. But the government's different roles its different perspectives—also produce conflicts that must be reconciled. Thus, the government has the additional job of reconciling its different roles to reflect the public interest. Reading the inventors' stories contained in this volume, I was struck by the breadth of time they covered—from World War II to the present day—and by how much the government's roles from each of the four perspectives has changed during that time. Government has both made the trends and responded to them. Its actions also refer to other trends beyond those considered here, trends in the larger economy and in domestic and world events. I will review the changes in the govern- ment's roles in medical device innovation during the last 35 years; this will provide the background for projecting changes in the government's roles in the future. THE GOVERNMENT'S ROLE IN RESEARCH The 1950s and 1960s were halcyon days for medical research. National spending on health research and development more than quadrupled from 0.06 percent of the gross national product (GNP) in 1950 to 0.27 percent in 1970 (National Institutes of Health, 1975; U.S. Bureau of the Census, 19851. The nation's economic resources were growing, and an increasing share of those resources was being allotted to medical research. Responding to the wealth of new possibilities in medical research and the public's desire to benefit from those possibilities, the federal government became a major player in medical research. By 1970, the National Institutes of Health (NIH) dominated the federal role in supporting medical research. NIH's share of all health research and development (R&D) dollars rose from less than 20 percent in 1950 to about 40 percent in 1970 (National Institutes of Health, 19751. Since then, national spending on health research and development has leveled off at about 0.30 percent of the GNP, and NIH still accounted for

156 60 Z 40 G ' In 70 30 All Government Plus Private Insurance _' - - Private Insurance ~ Federal Government - ~_ HOW TRENDS WILL INTERACT / State and Local Government o 1 1 1 1 1 1 1 1 1950 1955 1960 1965 ~IGU~ 1 Third-p~y payment for medico care. 1970 1975 1980 1985 YEAR about 40 percent of the total in 1985 (National Institutes of Health, 1985; U.S. Bureau of Economic Analysis, 1987~. THE GOVERNMENT'S ROLE IN FINANCING HEALTH CARE Third-party payment for medical care by private insurers and the government has grown enormously since 1950 (Figure 1) (U.S. Social Security Administration, 1976; Waldo et al., 19861. In the beginning, the government was primarily an observer; many federal programs were debated, but few were passed. Meanwhile, private insurance payments rose from less than 10 percent of total expenditures for personal health care in 1950 to nearly 25 percent in 1965. During these years, health care spending by federal programs remained at about 10 percent of the total, and state and local spending remained at about 12 percent. With the passage of Medicare and Medicaid, the federal government

PERSPECTIVES OF INDUSTRY, THE PHYSICIAN, kD GOVERNMENT 157 took a much larger role in financing health care its share of expend- itures for personal health care rose to 22 percent in 1970 and gradually increased to its current 30 percent. Private insurance payments also continued to grow and are now about 30 percent, while state and local government spending has declined slightly, to less than 10 percent of the total. State and local governments, however, have control over more money than this figure indicates since they are responsible for allocating some federal funds, especially the matching funds provided for Medicaid. These changes have radically altered the market for medical services. Third-party payment covered 30 percent of expenditures for personal health care in 1950, increased to 70 percent by 1980, arid remained at that level in 1985. More money for research brought a host of new technologies that could save lives and improve health. More money for health care services made it possible for most people to avail themselves of these technologies, as when Medicare was extended to pay the costs of dialysis for people with end-stage renal disease. THE GOVERNMENT AS GUARDIAN OF THE PUBLIC INTEREST The government's role as guardian of the public interest and public safety has also expanded. Government regulation of medical devices expanded under the Medical Device Amendments of 1976. The Food and Drug Administration's responsibility for drugs has been widened "to include efficacy as well as safety. Health care services have been increasingly regulated through health planning, certificate of need, professional standards review organizations (PSROs), and PSROs' successors, the professional review organizations. In addition, the government is involved in the growth of medical liability cases through state and federal court systems and through state oversight of health insurance companies. THE STAGE IS SET These three trends research, financing, and regulation have con- verged in recent years; in each case, growth has leveled off after a period of rapid increases and major change. As a percentage of the GNP, federal spending on research has been stable for more than 10 years. Spending on health care services by all levels of government has been a stable percentage of spending on all services for nearly as long federal spending has crept up a few points, but state and local spending has declined. The Medical Device Amendments are still not fully implemented. Health planning has been repealed.

158 HOW TRENDS WILL INTERACT The leveling off has occurred for two reasons. One is that the nation's resource base has not grown as fast as it did earlier. The GNP per civilian worker, corrected for inflation, has grown much more slowly in the last 15 years than it did in the two decades ending in 1970 (calculated from the Economic Report of the President, 19861. The second reason is that no sector can increase its share of the national pie forever the enormous growth enjoyed by medical research and medical services in the 1950s and 1960s, and even a little beyond, had to end sometime. For the last several years (longer for research), government spending on health care has grown as fast as the GNP, but not faster. The combination of a stable share and a more slowly growing GNP has meant considerably slower growth for the medical sector. Total national health expenditures have remained at just over 10.5 percent of the GNP since 1982 (Waldo et al., 19861. I project that this situation will continue for some time, unlike earlier periods when health spending leveled off for a couple of years before increasing again. This means that, while the market for medical devices is large and will remain large, it will not grow faster than the GNP. Unless the GNP grows faster than it has in the past 5 or 10 years, growth in the market for medical devices will be rather slow. A bright spot, however, is offered by the recent fall in the value of the dollar relative to currencies of other countries. By February 1985, compared with the currencies of our major trading partners, the dollar had risen $1 percent above the average level of 1980 (Board of Governors, Federal Reserve System, 19871. In the last 2 years it has fallen until it is nearly back to the level of 1980. The higher dollar made it difficult for U.S. producers of anything—medical devices included to compete with foreign producers and encouraged produc- tion abroad. The recent fall of the dollar greatly improves the ability of medical device manufacturers to sell their products to other coun- tries. Better markets abroad should help counter the change in growth of domestic markets, and could also provide a rationale for increased investments by the private sector. THE GOVERNMENT AS RECONCILER OF CONFLICTING INTERESTS, INCLUDING ITS OWN I have projected that government spending on health, whether for research or services, will not grow very much as a percentage of the GNP in the next few years. Indeed, I suspect that total spending- pr~vate as well as government will not grow much. In the future, there are likely to be shifts of emphasis within the total amount government spends on health, not a decision to change the GNP share

PERSPECTIVES OF INDUSTRY, THE PHYSICAL, AD GOVERNMENT 159 for medical care relative-to other goods and services. If this is the case, the government will have a difficult role to play reconciling the conflicting interests of those who would like a larger share of the resources pie. It has sampled this new role in the last few years with the implementation of policies like the Prospective Payment System, which were implemented to help slow increases in government ex- penditures for health care. For these reasons, I agree with Anthony Romeo's conclusion (this volume) that there is no rationale for increasing federal funding for research at this time. In addition, the large and continuing federal deficits make it unlikely that there will be large increases in any kind of federal spending, medical or nonmedical. All health care services and all technologies new and old are likely to be affected by slower growth in the future. Cost-reducing technologies or services should do better in this new fiscal environment than they did previously since they free resources for other uses. With new resources hard to come by, cost savings will be a valuable source of funds. The effects of the new resource-constrained environment on cost-increasing technologies or services should depend on their benefits relative to their costs. If benefits are high, cost-increasing technologies or services should be used almost as widely as they would have been if health expenditures were growing rapidly. If benefits are low, they should be used with considerably more restraint; if the benefits are low enough, they may not be used at all. Thus, some new technologies will continue to disuse rapidly, others will spread more slowly and less extensively than they would have under conditions of rapidly increasing resources for medical care, and some may be cut back. The effects of slow growth will be easiest to spot when technologies or services are cut back; for rapidly diffusing technologies, it will be harder to discern the difference between the old environment and the new one. There is already some evidence for these responses to slowed growth of resources for medical care. Stuart Altman noted (this volume) that magnetic resonance imaging (MRI) seems to have spread fairly rapidly in spite of the Prospective Payment System (PPS). However, PPS may be one of the reasons MRI has spread more slowly than computed axial tomography (CAT) did, and it is almost certainly one of the reasons that MRI has been located in outpatient settings much more than CAT was (Steinberg et al., 19851. Altman also noted that the new pacemakers, which became available just before prospective payment was introduced, have also been accepted quite rapidly. At the same time, a study by the General Accounting Office (1986) found that the use of intensive care for Medicare patients dropped

160 HOW TRENDS WILL INTERACT after the introduction of prospective payment. The study covered the years 1981 through 1984. From 1981 to 1983 the number of days of intensive care used by Medicare beneficiaries increased every year. Between 1983 and 1984, the first year of prospective payment, the number of days used declined 14 percent. Reconciling conflicting interests in a situation of slow growth ob- viously poses many difficult choices. What sorts of policy does this suggest for the future? What sorts of changes will there be in the government role? I suggest three sorts of changes that echo themes sounded by other contributors to this volume. The first is that direct spending is unlikely to be a major method for reconciling conflicts in the future. It will no longer be possible to resolve conflicts by giving some parties more money and letting others keep what they already have; instead, money may have to be shifted from one party to another. The second change is that payment systems will continue to evolve in ways that encourage conflicting interests to achieve their own solutions. The third change is that the need to resolve conflicts will lead is already leading to more emphasis on gathering and sharing infor- mation. Changes in the Payment System The government is already playing an important role in changing the way medical care is paid for and will continue to do so. The direction has been set; the nation will not return to cost-based reimbursement. Future changes will probably take the payment system in the direction of more global prospective payment, toward a system that covers more services, providers, and payers. This will bring budgetary constraints to bear more evenly across the health care system. It also should help avoid some of the peculiar results now appearing as providers move services away from tightly constrained settings and into those that are, for now, less constrained. It is important to remember that no payment system can be problem- free. No payment system is capable of making everybody happy and of never producing an odd or an unfair result. Further, I submit that there is no such thing as the "neutral" payment system that Stuart Altman has described. For a payment system to be considered neutral, it would have to produce results that everybody agreed were the appropriate ones; there is no consensus on what the best, or appro- priate, results are.

PERSPECTIVES OF INDUSTRY, THE PHYSICIAN, AND GOVERNMENT 161 Information for Making Choices Decisions about the adoption and use of new technologies are more difficult in a period of slow growth. Not only the benefits and risks but also the costs of the technology must be weighed, because costs represent the alternatives that must be given up in order to use the technology in question. Such decisions can be described as allocating resources, or rationing resources, or making appropriate use of re- sources; the terms are interchangeable. The resources available to the medical sector are not sufficient to do everything that everyone would like to do, and some hard decisions must be made about which things will get the most attention. Information is essential for good decisions, but information is not always welcome. Information makes decisions clearer, and thus more painful. Thus, there will be times when, although it seems sensible to learn as much as possible in order to make the best decision possible, people would really rather not know that much about the implications of their decisions. As the nation tries to use its medical resources appropriately in the years ahead, those involved in the decisions will ask for more information than they have in the past, notwithstanding the discomfort information sometimes causes. With resources growing slowly, we are more concerned about what we are getting in return for what we are spending. Every actor in the system, including government, will want more information upon which to base its decisions. I cite two examples of what ~ see as an increasing appetite for information. The first is the release of hospital mortality data by the Health Care Financing Administration. Mortality is a crude measure of outcome, but the release of these data was a useful step in beginning to focus people's attention on outcomes and the variation in outcomes among providers. Making the data public has started people thinking about how to improve them so that they will more accurately reflect quality of care. The second example is manufacturers' increasing interest in comparing the efficacy of their products with that of competing products. Such information should be valuable to patients as well as to manufacturers and their clients. Finally, I want to emphasize that when information is created, it should be made available to all the players not just providers, or manufacturers, or doctors, but to patients as well. Patients have more reason than anyone else to be concerned with the choices made about allocating medical resources. They should have the opportunity to get involved in both national and individual decisions.

162 HOW TRENDS WILL INTERACT POSSIBLE ROLE FOR THE INSTITUTE OF MEDICINE Frank Samuel (this volume) rightly urged the importance of carefully defining quality of care in terms of outcomes. Cost-containment has brought new attention to this issue because of the fear that pressures to cut costs will lead to reductions in quality and poorer outcomes. In my view, we have been too complacent about quality. Quality deserved more attention before prospective payment, and one of the good results of prospective payment is that quality is receiving more attention now. A number of organizations are interested in the issue of quality of care. Many of them have undertaken studies. But, except for the Health Care Financing Administration, which for obvious reasons should not be counted on to provide complete and objective infor- mation, none of them is in a position to produce more than a series of small, rather specialized studies. A lot of small studies undertaken according to the ideas of each individual group may not add up to very much. The Institute of Medicine could provide an overall plan—a research agenda -- that would allow these organizations to tailor their studies to provide pieces of information that, taken together, would produce a more coherent view of outcomes. The Institute of Medicine is ideally suited to this task for several reasons: It is not tied to any of the major actors—government, providers, insurers, or patients—yet it is a na- tional organization that can call on any of them for advice and help; it has the credibility to get attention for its recommendations; and it brings together in its members all the disciplines that would need to be involved in providing such guidance. The research agenda should include components ranging from recommendations about methods to monitoring work in the field. It should outline the available methods for studying outcomes and indicate which have been validated. The best methods are likely to be complex and expensive, and the plan could indicate the circumstances in which simpler methods would be useful and circumstances in which only the best would do. The plan could point out issues and groups most in need of detailed study; it could also point out the methodological areas in greatest need of work. The Institute could monitor developments in the field, revising the agenda as necessary. It could also, of course, contribute some of the required studies. There is no conflict between the short and long term in developing such a plan; the issue of quality is not going to go away. The research agenda would necessarily start with what is going on now, providing an overall framework that made clear the best and worst aspects of

PERSPECTIVES OF INDUSTRY, THE PHYSICIAN, kD GOVERNMENT 163 current activity. Such a framework would help set the direction for the next decade and beyond. REFERENCES Board of Governors of the Federal Reserve System. 1987. Federal Reserve Bulletin 73(2). Washington, D.C.: Federal Reserve System. General Accounting Office. 1986. Medicare Past Overuse of Intensive Care Services Inflates Hospital Payments. Washington, D.C.: U.S. Government Printing Office. National Institutes of Health. 1975. Basic Data Relating to the National Institutes of Health. Washington, D.C.: Department of Health, Education, and Welfare. National Institutes of Health. 1985. Basic Data Book: Basic Data Relating to the National Institutes of Health. Washington, D.C.: Department of Health and Human Services. Steinberg, E. P., J. E. Sisk, and K. E. Locke. 1985. X-ray CT and magnetic resonance imagers. New England Journal of Medicine 313(14):8594864. U.S. Bureau of the Census. 1985. Statistical abstract of the United States: 1986, 106th ed. Washington, D.C.: Department of Commerce. U.S. Bureau of Economic Analysis. 1987. Survey of Current Business 67(1). Washington, D.C., Department of Commerce. Economic Report of the President. 1986. Washington, D.C.: U.S. Government Printing Office. U.S. Social Security Administration. 1976. Compendium of National Health Expenditures Data. Compiled by B. S. Cooper, N. L. Worthington, and M. F. McGee. Washington, D.C.: Department of Health, Education, and Welfare. Waldo, D. R., K. R. Levit, and H. Lazenby. 1986. National health expenditures, 1985. Health Care Financing Review 8(1):1-21.

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In the past 50 years the development of a wide range of medical devices has improved the quality of people's lives and revolutionized the prevention and treatment of disease, but it also has contributed to the high cost of health care. Issues that shape the invention of new medical devices and affect their introduction and use are explored in this volume. The authors examine the role of federal support, the decision-making process behind private funding, the need for reforms in regulation and product liability, the effects of the medical payment system, and other critical topics relevant to the development of new devices.

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