UPTAKE AND DIFFUSION OF PHARMACEUTICAL INNOVATIONS IN HEALTH SYSTEMS - Innovation in the Biopharmaceutical Industry - page 87

competitiveness and technological leapfrogging. Focusing on the “pull” and “push”
interaction alone may result in undue emphasis on the early stages of the innovation
and an R&D base which has difficulty in translating new discoveries into applica-
ble therapies, as development of reward systems which encourages adoption and
diffusion of innovations may be overlooked. Creation of an enabling environment
which encourages adoption and diffusion of innovations is critically important to
ensure innovators are appropriately rewarded.
A further problem with the predominant innovation models is that they tend to
be “generic” rather than domain focused. The innovation process in life sciences,
and particularly in the biopharma sector, has a number of distinctive features that is
unique to this knowledge-intensive domain. For example, the biopharma sector is
characterised by lengthy product life cycles (on average it takes 12 years of R&D
before a new chemical entity (NCEs) is launched to market), high-risk due to high
attrition rate in R&D (on average only one in 100 NCEs that go into development
make it to market), high development costs (estimated to be over US$800 million
for a product (DiMasi et al. , 2003)), high levels of government regulation, multiple
stakeholders involved in decision making, and market failure when regulation is
inappropriate or “partial”. Another important feature of the innovation process in
the biopharma sector is the “bench-to-bedside” interaction. The ability of physicians
to work across a wide range of scientific fields at “the bench and bedside” enables
continuous innovation, as new technologies and solutions are developed incremen-
tally over many years during which effects of existing innovations on health status
of users are observed and solutions incrementally enhanced to address the problems
identified (Sheridan, 2006). Understanding these unique features of the innovation
process in the life sciences and biopharma sector is therefore critically important.
Health Systems Goals and Objectives
The goals of health systems are to improve the level and distribution of good health,
to provide an adequate level of financial risk protection, and to ensure users are satis-
fied with the services they receive. Health systems should deliver effective services
and technologies in an efficient manner, but also be equitable and responsive to user
needs. Equity, efficiency, effectiveness and choice objectives all must be balanced
to reflect society's preferences and priorities. These priorities will differ in different
countries as societal preferences and value systems vary. For instance, the United
States, with a more libertarian orientation, emphasises individual choice while in
many European countries equity is an overarching societal objective. In order to
achieve these health system goals and objectives, governments should encourage
the adoption and diffusion of health-improving innovations and mechanisms which
efficiently allocate resources to the most cost-effective interventions.