Responses of Medical R&D to Changing Economic Incentives: Implications for the Future of Health Care Costs and Quality

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 ³me-too² technologies to more innovative technologies offering the promise of major quality improvement.