Conference

There is no definite measure of innovation. Innovation can be anything that people find useful and can be evolutionary, though not duplicative. The ultimate arbiter of value is the consumer.

The key drivers of innovation; market forces and demand, scientific knowledge and technological opportunities, and institutional incentives and hurdles, all have the potential to affect the financial conditions for innovation, which is expected to produce a positive net present value. However it is important to remember that innovations evolve over time through small incremental improvements, not just major radical innovations.

Pharmaceutical innovation has many dimensions as illustrated in on the right.

However in today’s environment health care Payers want innovative medicines that provide significant increases in health benefits, and at the same time are trying to save health care costs. A new medicine may be more or less innovative along any one or more of the dimensions illustrated above. Any pricing and reimbursement policy with the potential to increase the uncertainty of future earnings if a company fails to launch the first in class medicine may end up discouraging potentially worthwhile R&D investment.

Adrian argued that payers need a clearer understanding of innovation – that it is both multidimensional and continuous, and that the cost-effectiveness of new medicines, beyond the immediate health benefits needs to be demonstrated by producers and incentivised by payers.