How Does Managed Care Influence New Medical Technology?

Survey of Changes in Medical R&D and long-term health care cost implications

Between April 1993 and June 1997, researchers at Northwestern University, Evanston, Ill., conducted studies to learn how public and private strategies to contain health care costs have affected the development of new medical technologies, including equipment and pharmaceuticals.

Little is known about how health care technology firms make decisions about what new technology to develop. Technological change has been among the major factors driving years of rising health care expenditures.

Researchers planned and developed two surveys-one for medical equipment firsts and one for pharmaceutical firms and administered them to approximately 100 medical research and development firms.

Key Findings

  • Respondents reported increased emphasis on cost.
  • Firms reported increased emphasis on quality.
  • Firms expect a greater proportion of products currently under development to be top sellers.
  • Many firms expect a quicker return on their new products.
  • Some differences emerged between biotechnology firms, pharmaceutical companies, and device manufacturers.
  • Small firms (those with less than $200 million in annual sales) were significantly more likely than large firms to report that their projects were expected to be cost-reducing.