COVID-19, Healthcare, and Innovation: A Conversation with Dr. Jeffrey Clemens

Health Policy

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The Summary

Free the Facts heard from Dr. Clemens on Monday at its sixth Fall Policy Tour event

FtF Policy Advisor Dr. Julius Chen hosted a conversation with Dr. Jeffrey Clemens during the sixth Fall Policy Tour event of 2020.

COVID-19 has exposed weaknesses in our health care system, but thanks to financial incentives created by the federal government, it’s also spurring medical innovation to new heights, Dr. Jeffrey Clemens told Free the Facts Monday night at its sixth virtual policy event of fall 2020.

Not only have pharmaceutical companies developed a COVID vaccine in record time, but the lack of testing supplies across the country has also challenged public health officials to rethink how our entire system works.

In a conversation with Free the Facts Policy Advisor Dr. Julius Chen, Dr. Clemens discussed how, in light of the federal government’s unsuccessful efforts to contain the pandemic, public health experts are taking a hard look at revamping two institutions in particular: the Food and Drug Administration and the Centers for Disease Control and Prevention.

“What I think we’ve seen during the pandemic is the FDA and the CDC have a system that works well for normal circumstances … but that we start to see some tensions when we think of the extraordinary circumstances” created by the pandemic, Dr. Clemens said.

In normal times, when the FDA and CDC are confronted with a new disease, they strive to develop one, highly accurate test that can be used uniformly across the country – and for good reason, because “uniformity and quality [mean] we can track the disease consistently.”

But we’re not living in normal times. And when an initial batch of COVID test kits distributed by the CDC didn’t work, the United States lost crucial time in containing the spread of the disease.

In other words, COVID-19 has taught us that getting “reasonably high-quality tests up and running” by allowing the private sector to develop a “multiplicity” of tests would’ve helped prevent long lines at testing centers.

“What we need is the FDA to have a separate track” of approval for potential drugs and tests during extraordinary times such as those we’re in, he concluded.

Clemens, an associate professor of economics at the University of California, San Diego, focuses his research on the many ways the federal government can encourage medical innovation and enhance quality of care.

Early in the conversation, he stressed to Dr. Chen that though America’s health care system does give a larger role to the private sector than other countries’, “in comparison to any other major industry,” it is still “driven by the actions of government.”

First, the FDA has to put its stamp of approval on every drug or test used in the United States.

Second, Medicare and Medicaid, which account for 40 percent of all health care expenditures, set reimbursement rates for treatments, which influence whether physicians decide to offer them.

And third, the federal government helps determine which public health challenges get the most research through grant funding awarded by the National Institute of Health and the National Science Foundation.

The federal government has many levers at its disposal, but in general, Dr. Clemens finds, it is most successful at spurring innovation when it concentrates the profit-seeking attention of private-sector companies by setting clear priorities and financial incentives.

“When pharmaceutical companies know that there’s a large market – a large need that they can potentially meet – we see time and time again they lean into that market and deliver remarkable advances in terms of the available pharmaceuticals,” he noted.

The lightning speed with which pharmaceutical companies have developed a COVID vaccine is a case in point. The federal government got the race for a vaccine started by providing grants for early-stage research. Then it also ensured many private-sector companies would join in the effort by committing to purchase a large number of doses from the first few companies to produce a viable vaccine.

It is a common story throughout American history, Dr. Clemens observed. During the Civil War, tens of thousands of veterans came home with severe injuries, so the federal government created a program to provide them with much-needed prosthetics. In response, prosthetic companies created far more advanced models for the wounded veterans to choose from.

“Time and time again throughout history, we see medical innovators are capable of doing really amazing things,” Dr. Clemens said.

And challenging though it may be, we seem to be living in just one of those times.

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