The Relationship Between Medical Innovation and Health Expenditures

Abstract

Objectives: It is widely accepted that medical innovation includes many costly activities, and that it is a key driver of rising health care expenditures. Understanding the relationship between medical innovation and health care expenditures is critical for health policy makers to effectively make resource allocation decisions. This study seeks to investigate the relationship between medical innovation and health care expenditures. Methods: We assessed data from the World Intellectual Property Organization and World Bank statistics for the year 2014, which included data from 72 countries. The number of patent publications in the categories of medical technology, biotechnology, and pharmaceuticals were included as medical innovation indicators; public heath, health care costs per capita, and total health care costs (percentage of gross domestic product [GDP]) were included as indicators of health care-related expenditures. A canonic correlation analysis (CCA) was performed to examine the degree of association between the sets of medical innovation and health care expenditure variables. Results: Study results indicate that there is a strong positive correlation between medical innovation and health care expenditure variables (rc= 0.68, p<0.001). Conclusions: In light of this study, health policy makers should manage the relationship between medical innovation and health care expenditures with a focus on accessibility. Improved communication channels in the social system, increased international cooperation, and the determination of a proper balance between the benefits and costs of innovation may help to continue improving medical innovation and enhance health care accessibility. We hope that the study results offer an increased awareness of the relationship and balance between innovation and expenditure, and will help to create an improved health system.