This review summarizes the theoretical and empirical literature on the importance of linkages between universities and industries in the development of commercial applications of biotechnology. These linkages range from formal agreements, such as patent licenses and research alliances, to informal collaborations, such as joint research, copublication, and consulting. Because biotechnology involves a new research method, the tacit knowledge embedded in it became critical to its commercialization. Specifically, it requires the direct involvement of star scientists who have this tacit knowledge and are well remunerated for it. This process is facilitated by the passage of the Bayh–Dole Act, which allows universities to retain ownership of crucial patents and provides incentives to the star scientists to cooperate in development and commercialization. Over time, a complex web of collaborations and alliances has evolved in therapeutic, diagnostic, and pharmaceutical biotechnology, whereas extensive consolidation has occurred in agricultural biotechnology.
University–Industry Linkages in the Support of Biotechnology Discoveries by Richard A. Jensen :: SSRNNovember 7, 2016
In the case of specialty drugs, CVS is now the largest supplier and dispenses about 25% of prescriptions in the $86 billion business. Mr. Merlo expects these therapies to grow to 50% of total pharmaceutical spending, from 38% today, as innovations for unmet medical needs—or even common conditions like high cholesterol, which will be targeted by the forthcoming PCSK9 inhibitors—come to market.
So what to do? Think of an “illustrative trend” of a 20% growth rate in specialty drug costs, Mr. Merlo says. He estimates that CVS Caremark, which covers 65 million people, can erase as much as 16 percentage points. PBMs create tiers of preferred drugs, for example, which give patients an incentive to choose cheaper generics over name brands. Other management tools, like drug formularies, narrow pharmacy networks, care coordination, step therapy and the like, can add to the savings.
Key Findings ______________________________
From Fortress to Frontier. To replicate the kinds of revolutionary innovation seen in other fields, health care policymakers need to discard the constraints of their Fortress mentality and adopt a Frontier attitude, which tolerates calculated risks and welcomes competition from diverse practitioners and disciplines.
Address supply as well as demand. America’s health care debate has focused almost exclusively on demand: how many people have health coverage, and how providers are paid for which currently offered services. Successful reforms must ease limitations on both demand and supply, promoting innovations that can alter the nature of health care delivery and lower costs.
Step-by-step reform. This does not require wholesale, politically unrealistic changes in the health care sector. Indeed, reformers should instead advance through many small, incremental, and simultaneous steps, seizing opportunities to break down barriers to reform, possibly achieving quick victories.
Breaking down barriers. A vast range of such opportunities are at hand. The Fortress mentality has erected numerous obstacles to health care innovation. These obstacles are readily identifiable and can be overcome with targeted reforms that do not require a sweeping overhaul of the health care sector. The idea is to identify every potential limit on the supply of health care services, and then eliminate it. If the United States doesn’t do this, other countries will, and America will lose its leadership position in medical innovation.
But what is either evaded or not considered in this anti-profit atmosphere is that irrespective of the size of the concern engaged in a productive endeavor, the principle is the same. Productivity is a virtue and profit is the lifeblood, the prerequisite of continued operation. If profit, the amount of revenue that exceeds costs, did not exist, capital would be depleted and operations would soon cease. That healthcare systems are often non-profits and do not have shareholders or pay every tax doesn’t change the economic reality that costs cannot exceed revenues (or reimbursements) indefinitely. If there were no capital, healthcare as we know it would evaporate.
via Too Big to Profit?.
The US health care sector is large and growing – health care spending in 2011 amounted to $2.7 trillion and 18% of GDP. Approximately half of health care output is allocated via markets. In this paper, we analyze the industrial organization literature on health care markets focusing on the impact of competition on price, quality and treatment decisions for health care providers and health insurers. We conclude with a discussion of research opportunities for industrial organization economists, including opportunities created by the US Patient Protection and Affordable Care Act.
The so-called bodega clinicas that line the streets of Los Angeles’ immigrant neighborhoods blend into a dense forest of commerce. Wedged between money order kiosks and pawn shops, these storefront doctors’ offices treat ailments for cash: a doctor’s visit is $20 to $40, a podiatry exam is $120 and at one bustling clinica, a colonoscopy is advertised on an erasable white board for $700.
County health officials describe the clinicas as a parallel health care system, servicing a vast number of uninsured Latino residents, yet the officials say they have little understanding of who owns and operates them, how they are regulated and the quality of the medical care they provide. Staffed with Spanish speaking medical providers, few of these low-rent clinics accept private insurance or participate in Medicaid managed care plans.
The billions of dollars in tax breaks granted to the nation’s nonprofit hospitals are being challenged by regulators and politicians as cities still reeling from the recession watch cash-rich medical centers expand.
Hospitals, among the largest landowners in many communities, are often designated as nonprofits, allowing them to benefit from state and federal tax breaks for providing “charity care and community benefit.” The exemptions collectively amount to more than $12 billion annually, health economists say.