which new technologies are generated differ enormously from one sector of the economy to another. Nothing is more likely to muddy the waters of understanding, and therefore muddy the policymaking process as well, than the notion that we are dealing with a uniform set of relationships when we move from one sector of the economy to the next, carrying with us the assumption that "one size fits all." The beginning of wisdom is the recognition of the extreme diversity of background conditions underlying the innovation process. Arrangements that may work well in semiconductors or the aircraft industry may not work well at all in pharmaceuticals. Indeed, what has worked well in pharmaceuticals may not work at all in the newly emerging biotechnology sector. Moreover, if we consider new clinical procedures or medical devices, the conditions for successful innovation are probably very different from other subsectors of the medical technology realm. Even within these subsectors, there is considerable diversity in this respect. Consider, for example, medical devices. Medical devices encompass a heterogeneous group of products, ranging from low tech, inexpensive devices such as tongue depressors and disposable needles, to sophisticated and expensive modalities such as lithotripters and magnetic resonance imaging (MRI) machines. Obviously, the research required for the invention of, for example, disposable needles is quite different from that required for the invention of the computerized tomography (CT) scanner; the heterogeneity in products, and their research and development (R&D) strategies, is reflected in the manufacturers that produce these products.

If we focus on the conditions governing the supply of new medical technologies, two characteristics emerge that merit specific attention in this respect. First, evidence suggests that medical innovation is becoming increasingly dependent on interdisciplinary research.1 That is, the successful development of a particular technology frequently requires close cooperation among a growing number of individuals with diverse but relevant professional backgrounds. In the case of pharmaceuticals and biologicals, for example, the development of a drug may require cooperation among organic chemists, molecular biologists, immunologists, material scientists, toxicologists, chemical engineers, clinicians, and so on. In the case of medical devices, the interdisciplinary nature of innovation appears even more obvious. The development of devices generally depends on the transfer of scientific and technological advances outside of medicine (e.g., in physics, engineering, and their relevant subfields, such as micro-electronics, materials science, optics, etc.) into medicine. It thus requires the interaction of physicists


An interesting indication that this is the case can be found in the recent Food and Drug Administration (FDA) guidelines on "combination products." These guidelines were issued because the FDA's traditional division of products into drugs, biologicals, and devices is becoming problematic as an increasing number of products are combinations of drugs, devices, or biologicals—for example, hormone-releasing intrauterine devices.

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