DR. MARK McCLELLAN: Thank you for that introduction. It's a real pleasure to be here with you all at this very important event to honor some very important research. This is actually ... I know I go back a ways with many of the Research! America board members and many of the people who have come to distinguished events that Research! America has held in the past. This is the first time I've had to address you all at a Research! America event after being out of government.
It's been about a year now. And I can tell you life is good, you know. It's a lot more fun to be selecting the best paper in health economics on medical innovation than it is to be selecting drug plans, for example. But one of the first calls that I got after leaving government was from Mary Woolley and Paul Rogers about doing some more extensive work with Research!America. And this was an easy one for me. This group has such an impact.
If you look around the room and see the diversity of views, people who don't agree on everything about our health care system but have come together to be an effective force for advocating for something we really need, which is stronger and more consistent support for biomedical research, taking it all the way through to getting cures to patients. This is a fundamentally important task. And it's a real privilege for me to be part of all of that.
And again, it's a very special privilege to be part of the Garfield Award selection committee this year. We had a terrific committee of distinguished economists and other researchers and policy leaders in health care. Gene Garfield was actively involved in the selection process itself. We had a number of very interesting papers that we had a chance to review. And it gave me a sense of just how far this award has come. This has not been around for a really long time. But over the years, the Garfield Awardees have become increasingly well recognized by their peers, by their policymakers, by business and health journalists, by foundations, by the general public.
And this is all because of the kind of work and the kind of momentum that you all can create. It's a combination of good ideas, but also knowing how to get things done. And it is, again, a great privilege to be part of this effort. It's also a tribute to Dr. Garfield's intent and his vision for these awards to be made to outstanding young economists, people who are relatively early in their career in order to get them moving down this very important line of economic study. And also to get the recognition, the appreciation for these kinds of studies in the broader health policy community and funding community.
And I can tell you as an economist myself that this award is a recognized and important achievement for economists working on health and health policy issues. And we all owe Eugene Garfield an enormous debt of gratitude for your vision and support for this effort. So thank you very much, Gene. [applause]
Now, this award is about work on how medical and health research impacts the economy broadly. It's not about cost‑effectiveness. It's not about so many usual things that you hear about in health policy. But this is getting to be a more prominent part of public policy debates and discussion. That's a good thing. It is very encouraging, I think, to note that Americans are becoming well aware, thanks in good part to your efforts, of the important contributions of scientific research to the economic welfare of our nation and communities around the country.
Around 70 percent of the American public said that they think scientific research is very important to the economy in a Research! America poll commissioned earlier this year. And this impression has been increasingly backed up by careful and informed economic analysis. And that's what the recipients of the Garfield Award this year have done. What I want to do now is spend a few minutes telling you about some of the valuable work done by prior Garfield Award winners and how we are now adding to this body of work that is increasingly having an impact on public policy.
Last year's recipient, my friend Dr. Amy Finkelstein of MIT, looked at the impact of health policies that sought to increase the use of vaccines to see if these policies that support increased vaccine use in turn could drive forward research, could stimulate the development of more and better vaccines. She did a careful analysis computing dollar values for the social health benefits from increased vaccination rates and the underlying vaccine research. And she found that these policies that encourage vaccination were associated with a two-and-a-half fold increase in clinical trials for new vaccines against the diseasesthat were affected by these policies to promote better development.
And this has already had an impact on policy. I can tell you because it was one of the factors that we considered when I was at CMS in undertaking the biggest increase in CMS history in payment for vaccines and their administration. The 2005 recipients, Professors Kevin Murphy and Robert Topel at the University of Chicago ... and by the way, you're going to see a pattern here. A lot of University of Chicago folks turn up. I think that's a real compliment to that university. They calculated a dollar value for the life expectancy gains due to the advances in medical research.
From this calculation, they estimated that improvements in life expectancy alone, not even counting improvements in quality of life that have occurred for many diseases that are debilitating, the improvement in life expectancy alone added about $2.6 trillion per year ... trillion ... to national wealth between 1970 and 1998, $2.6 trillion per year. That is a huge value. They also calculated the economic gains linked to conditions like heart disease where research has led to further debt. It's built on some previous work that Murphy and Topel have done estimating that improvements in health from 1970 to 2000 were worth $95 trillion or over $3 trillion per year.
During this period, while we're seeing this tremendous gain from improved biomedical knowledge, there is a total investment in the NIH of $200 billion. And even if you count all the private research and funding through other agencies that also contributed to the improved biomedical knowledge, it's very clear that there's a huge return on the investments that we're making in improving biomedical knowledge.
In the preceding year, in 2004, Dr. Sherry Glied of Columbia University received the award. What she examined was various explanations behind the declines in fatal injuries to children. And one might think that this was not an issue that directly related to research or to scientific information. Well, what she found, interestingly, was that there is a lot of evidence that parents' access to science-based information about children's health was more important than regulatory intervention, than changes in living conditions and just about all the other factors that she looked at in her study. Her work showed how the development of scientific information had a true public good value to bring about improvement in decisions and improvements in outcomes for the children of this country.
You heard from Gene about the 2003 recipients. My frequent collaborator, Dr. David Cutler of Harvard University, outlined a way to measure the value of medical research and the public knowledge derived from it.
He examined cardiovascular disease, building on some work that we had done together, and showed the value of medical research in leading not only to new therapy, but also to new information that people can use in their day-to-day decisions about health care. Remember, your decisions about health care are extremely important. And these improvements in health, the science behind improved health care, can lead to important behavioral changes and important impact on health outcomes as well.
And he estimated that the return from new medical treatments is about four to one. And the return on health knowledge is about thirty to one. In a separate study, he found that a $7 return to the economy occurred for every dollar spent on technological innovations in heart attack care. And that was again some work that we had performed together. So we have lots of evidence, growing evidence, about improvements in the value of biomedical research.
One of my other colleagues, another physician economist, Dr. David Meltzer at the University of Chicago, in 2002, developed a mathematical model to tell whether a research approach is worthwhile to pursue in an economic sense. And he theorized that in more applied research, it was crucial to make the case that research is actually likely to be valuable. And these methods have now started to have an impact on both prioritizing research projects that are performed by the public sector and identifying some new areas where further spending on research is likely to lead to high payoff.
So all of these studies have shown that research on research does yield substantial returns. And that the impact of biomedical research more generally not only is large, but may become bigger in the years ahead if we keep learning the lessons from these types of studies. Research can also contribute to avoiding health care costs, to creating better living conditions, to having an impact much more broadly in our health care system.
In fact, yesterday, I had the privilege of being with many of you who are here today at the Institute of Medicine's annual meeting, where Dr. Betsy Nabel of NHLBI and I co‑chaired a series of presentations on evidence-based medicine and the changing nature of health care. A distinguished set of speakers from all kinds of research backgrounds and policy backgrounds addressed topics like how we define value in health care and how policy changes can improve the value of care.
In particular, there are some very interesting conclusions coming out of these discussions yesterday. The speakers agreed, and the discussion identified, many opportunities to develop better data. We're living in a data-rich environment now. But we haven't yet translated it into an actual impact on care and results for patients. Remember, the 21 st century with all that we're learning about the mechanisms of diseases, all the science going into predicting which patients are going to respond, are going to have risks and benefits from particular treatments, the 21 st century is supposed to be increasingly about targeted treatment, more personalized medical care.
And a major finding I think from the discussion yesterday was that evidence-based medicine properly executed goes hand in hand with a move toward more personalized, targeted, effective health care. It's essential to getting much higher value that we do a much better job of translating increasingly rich data that we have on how patients are being treated, on actual experiences with care, on markers that go along with the use of particular drugs or other therapies, translate that into knowledge about more evidence about which patients are going to respond, about the risks and benefits in particular cases.
It's a real way to increase value. But there are a lot of challenges along the way. There was much discussion yesterday about issues like statistical power and avoiding biases when studies are done from data that are not the traditional kind of randomized controlled trials, that are much more based on how practices actually work in the real world. There was a lot of discussion about how to make sure that these studies are done in a way that doesn't focus broadly on average effects in broad populations when there are fewer and fewer average patients, but rather on how we can get evidence that's relevant to the particular treatment of particular types of individuals that takes account of things like individual preferences and histories and genomic makeup and diagnostic findings and predictors or markers of patient response. All the many factors that can make our health care not only more sophisticated and more personalized, but much more effective and much more valuable.
And there was a surprising, to me, discussion, surprisingly frank and forward discussion, about the need for policy changes to help bring about this better era of evidence-based personalized medical care. A lot of consensus is the way that we are paying out and the way that we're designing insurance benefits now just doesn't support this kind of personalized care that's focusing on getting the best help for a patient at the lowest overall cost. A lot of call for moving towards finding ways to get patients more involved in getting the best care at the lowest cost for their needs and supporting health care professionals, health care providers in innovative approaches to care.
Using electronic data systems, using remote monitoring techniques, using nurse practitioners and other types of less traditional health care providers to get better personalized care to patients rather than just following what's on the list of covered services in a fee-for-service program that's an increasingly bad fit. And then finally, a lot of discussion about the importance of partnerships.
And that brings me right back to the importance of Research! America. I think there was complete consensus yesterday that this is not something that the government can do alone. Former Secretary Donna Shalala talked about how health care is on the presidential agenda for candidates this year. But that there is still a lot of nervousness in the American public about turning over major decisions or a major expanded role of government in their delivery of care. People want change. But they also don't want the kind of privately controlled, personalized relationships that they have with their health professional disrupted too much.
So to solve this problem, we're going to have to work together. We're going to have to take the partnerships that have worked on issues like biomedical research and bring them to issues like how do we make our health care system better? And if you listen to the presidential candidates now, the presidential campaign has started early, they're saying something to me, at least, that sounds a little bit different.
Yes, everybody's expected to have a plan to provide either universal coverage or affordable access to health insurance for everyone. But what I think what all the candidates are implicitly at least recognizing, not explicitly telling you, is that we can't afford to do that if we just try to buy more people into our current health care system. It will not be affordable today. And it certainly won't get us on this path to this much more personalized prevention oriented care for the future.
So every single candidate has talked about ideas like supporting electronic health care to get more personalized, relevant information to patients and their physicians and health professionals working with them about their decisions. Support better health care. They talk about ideas like getting more evidence on how we can get better value in health care delivery, proven quality and avoiding unnecessary costs or chronic illnesses or other kinds of health problems.
They've talked about issues like taking the biomedical knowledge that we are getting from all the investment that's going on now that hopefully will be a larger investment in the future and translating it into personal better health care that can work to get better results for patients. This is something that was very important to me at CMS, where we tried to support some new directions and applied research, developing better evidence in our coverage decisions and things like that, particularly around chronic diseases that account for almost all of Medicare costs today.
It was very important to me at FDA. I'm very pleased that in the legislation that the President signed just a week ago, thanks to the support of many of you here that have made an instrumental impact, there is now a clear, strong bipartisan endorsement of the critical path initiative at FDA, which is all about creating better science of product development. Taking applied research and making it help us find better ways to prove that new treatments are safe and effective and can work in individual patients at a much lower cost than what we've seen in the past.
All this research investment that's going on now has not yet translated into an upturn in the number of personalized therapies that are being approved by the FDA. I'm confident that that can change with the enactment of this new program and continued leadership of all of you in this effort. But that is really all about public/private partnerships. And all about finding ways to translate good ideas and good intentions into making sure research has the positive and tremendous impact that it should on improving health for all Americans and people around the world.
And that brings me right back to our main purpose today. It is now my honor to announce the 2007 recipients of the Garfield Award. It is Tomas Philipson and Anupam, who goes by Bapu, Jena, both of the University of Chicago, Harris School of Public Policy Studies. These two scholars are being honored for their paper "Who Benefits from New Medical Technologies?" which was published recently in the Forum for Health Economic and Policy. They will tell you more about their study in a minute.
They focused, as you heard from Gene earlier, on HIV/AIDS therapies that have been developed over the last twenty years. And there are a lot of very instructive lessons from the tremendous amount of progress that we've made on innovation in HIV/AIDS for what hopefully can be applied to other areas where the progress has been slower, many types of cancers, Alzheimer's disease and the like. But what they found was that despite some of the significant costs of these drugs for patients, if you add it all up, if you do the full economic analysis, only a small share of the social surplus that's being created by patients with HIV/AIDS, living much longer and higher quality lives as a result of this innovation, only a very small fraction of that value is going to the producers of the new drugs.
And if you're an economist, this immediately raises a concern. Because the best way as you heard from some of the other earlier Garfield Award winner studies like Amy Finkelstein, the best way to incentivize more work to improve health is to put value behind it, put the economics behind it. And if we are not putting as much financial support into these tremendously valuable treatments that are being developed, much less proportionate to the value that we're creating, that suggests that we may want to invest more there.
So the same kind of argument that Research! America has been making, based on very strong evidence, about the value of investment in research itself. If we invest more in development, the payoff is what we're seeing now in HIV/AIDS is extremely high. So this is truly important, path-breaking work.
Nobody has put together ... this is a big part of our discussion about the paper in the selection committee. Nobody has put together a careful analysis of the economics of payment and reimbursement for the medical treatments with a careful analysis of the economics of the value that these kinds of medical breakthroughs have created. And this kind of combined comprehensive view can be very important for policy analysis. My hope is that the same kind of analysis can now be done, maybe by these guys, and hopefully by other economists, of other types of conditions. And we can see just whether this is a general pattern, whether it's something specific to HIV/AIDS. And that's going to lead to some further policy implications that could have an even greater impact on the pace of medical innovation.
Now, let me tell you a few more words, not just about their very distinguished research that we're honoring here today, but about some of these investigators themselves. I know Tom very well. He's a professor at the University of Chicago, Irving Harris Graduate School of Public Policy Studies. He's also a faculty member of the University's very distinguished Department of Economics and its law school. And I understand also Tom is spending some time with the Rand Corporation. We have some great folks from Rand here today too, another true institution in health care policy and innovation.
And I am also very pleased that Tom's ... this has to be your most distinguished, the high point of your career is that year and a half or so you spent working with me at FDA and CMS. Clearly had an impact on all of this kind of research.
In all seriousness, while Tom was there, he not only helped me fulfill a goal at FDA, which was to bring in more, fresh scientific perspective to the agency. And that is something that the other scientists at the FDA truly appreciated.
He also did a very important paper which I think deserves its own reward in its own right on the impact of the user fee program at the FDA, on speed of approval, on potential safety concerns and the like, a very quantitative analysis of really one of the core questions that people have been asking about FDA, which is are these user fee programs a good idea? What are the pros and cons? Well, he put the numbers behind it in a very comprehensive way. And that, too, had an impact on the FDA legislation that was just enacted recently.
The actual high point of Tom's research career, probably not as important as I think it is, but winning the Kenneth Arrow Award, which is a high honor for health economists for the most important paper in health economics. He's won it twice. He's also received the distinguished economic research award from the Milken Institute for the best paper in any field of health economics. Tom earned his undergraduate degree in mathematics at Uppsala University in his native Sweden, his Ph.D. in economics at the University of Pennsylvania. It's a very distinguished career. And this is just another capstone. I'm sure there are going to be many more to come.
Bapu Jena is a little bit earlier on in the process and is exactly the kind of new scholar that I know Gene had in mind when he created this award. Bapu's a third year medical student at the University of Chicago. He's a visiting fellow at Rand. And he recently completed his Ph.D. in Economics at the University of Chicago as part of the medical scientist training program, the M.D./Ph.D. program there. I've got to tell you it's always a good sign and one of the other privileges with this job is I got to call and notify these two guys about the fact that they had won.
It's always a good sign when you're calling somebody up to get a hold of them for a research paper on health economics, you've got to go through their pager. So Bapu was doing one of his rotations. I pulled him off the ward to tell him about this. And it's been a real privilege for me to get to know him and see all the bright possibilities ahead for his future. His research is focused on this very important topic of the economic value of medical innovation, the implications of cost-effectiveness policies for changes in the use of medical technology.
And more recently, he's been doing some studies on the economics of fertility as well. His bachelor's degree was in economics and in biology from MIT where he graduated Phi Beta Kappa. And again, I have to speaking as another M.D./Ph.D. guy, he has a great career direction for you. We're really looking forward to your future impact on health care policy and the wellbeing of Americans and people around the world as well.
So I want to thank both of our award winners. And please join me in acknowledging the work of Dr. Philipson and Dr. Jena for the 2007 Eugene Garfield Economic Impact of Medical and Health Research. Thank you all very much. [applause]