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Limiting the growth of health care costs while improving population health is perhaps the most important and difficult challenge facing U.S. health policymakers. The role of innovation in advancing these social goals is controversial, with many seeing innovation as a major cause of cost growth and many others viewing innovation as crucial for improving the quality of care and health outcomes. The authors argue that mitigating the tension between improving health and controlling costs requires more-nuanced perspectives on innovation. More specifically, they argue that policymakers should carefully distinguish between innovative activities that are worth their social costs and activities that are not worth their social costs and try to encourage the former and discourage the latter. The paper considers innovation in drugs, devices, and methods of delivering health care, with particular attention to delivery.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Stages of Innovation and Defining Health Care Innovation

  • Chapter Three

    Cross-Cutting Conceptual Perspectives

  • Chapter Four

    The "Value Chasm"

  • Chapter Five

    Social Value in Drug and Device Innovation

  • Chapter Six

    Delivery Innovation and Social Value

  • Chapter Seven

    Conclusion

The research described in this report was sponsored by RAND Health's Comprehensive Assessment of Reform Efforts (COMPARE) and the Ewing Marion Kauffman Foundation and was conducted in RAND Health and the Kauffman-RAND Institute for Entrepreneurship Public Policy (KRI). KRI is housed within the RAND Institute for Civil Justice (ICJ). Both RAND Health and RAND ICJ are divisions of the RAND Corporation.

This report is part of the RAND Corporation occasional paper series. RAND occasional papers may include an informed perspective on a timely policy issue, a discussion of new research methodologies, essays, a paper presented at a conference, or a summary of work in progress. All RAND occasional papers undergo rigorous peer review to help ensure that they meet high standards for research quality and objectivity.

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