Every so often, good ideas to lower health care costs in the US will come from unlikely sources.
Consider organ transplants. Approximately 30% of the world’s 100,000 transplants performed annually are done in the US. Nine out of 10 of these involve kidney, liver, or pancreas.
One important problem in organ transplantation is the immune system’s adverse reaction to foreign objects, leading to organ rejection. Transplant nephrologists use induction therapy to deal with this problem. In this therapy, the physician introduces antibodies (typically, polyclonal as opposed to monoclonal) into the patient’s system to help suppress rejection.
The most common process in the US involves induction using polyclonal antibodies derived from rabbits. In a typical kidney transplant, for example, therapy using rabbit-derived antibodies costs up to $20,000 per patient.
Yet, evidence — from a team of nephrologists led by Dr. K. S. Nayak at Lazarus Hospitals in Hyderabad, India — shows that use of an equine-derived antibody can lower this cost to $600 to $800 per patient. This cost reduction is achieved by using a product made by an Indian company, Bharat Serums & Vaccines Ltd., and switching to a carefully-managed protocol that administers the equine-derived antibody in a single dose, as opposed to a multiple-dose protocol common in the US. (A smaller dose is given just prior to surgery since it aborts the initiation of rejection, and predisposes the patient to fewer post-surgical infections.) This approach has now been adopted in many developing countries.
In published research, Dr. Nayak and his team show that success rates from the use of such a single-dose, equine-derived, $600- $800 induction therapy are no different from those from the $20,000 procedure. If adopted across the 30,000 transplants in the US, this protocol could conceivably save hundreds of millions of US health care dollars, annually.
Interestingly, product development and testing of the equine-based product was originally done decades ago by researchers at the University of Minnesota, but use of the antibody failed to get FDA approval and its production stopped in 1994.
This raises two nettlesome questions. First, why did it take a team from emerging markets to adopt this US innovation? Second, why do cost-saving innovations like these fail to get adopted in the US health care system?
Our take on the question of why this was first adopted in an emerging market and not in the US? Contrast per capita incomes in the US and India: The average American earns $50,000 per year, while the average Indian earns one-thirtieth of that. Indeed, incomes of the majority of Indians lie below that already-low average. Add to that a lack of social safety nets or health insurance. Such severe economic constraints can, counter-intuitively, be an advantage in the innovation game. Why? Health care providers in countries like India are forced to push the price-performance paradigm. They are pressed to offer quality care at an ultra-low price.
But what might explain the US health care system’s inability to adopt and widely diffuse such low-cost solutions? Is it the incentives inherent in a fee-for-service system that compensates providers based on quantity rather than quality of services? Is it the delinking of the consumption of health care from price signals — i.e., providing a service to those who almost never have to see a bill, let alone pay for it out-of-pocket? Is it the way in which we train medical professionals, training that places no emphasis on cost of care?
How can high quality-low cost innovations be adopted in the US? What needs to change?