Paradox of Price

As health care consumes a larger and larger percentage of the GDP, one might assume that things are getting more expensive. We assume that brand-name medications, emergency department visits, hospitalizations, intensive care, advanced scans, and cutting-edge technologies cost more and more, but that might not be true. I was talking to some friends recently about personal genomics and testing services that market directly to the consumer. As sequencing technology becomes more efficient and cheaper, it has become possible for an individual to send in a DNA sample (like saliva) and for a company to analyze around a million genetic polymorphisms. To put this in perspective, the Human Genome Project took 13 years and around 3 billion dollars to sequence the genome, which is a little different than identifying genetic polymorphisms, but yields similar clinical information. When the company 23andMe started in 2007, the cost of the test was $999. Today, it costs $99.

Why the 10 fold cost reduction in six years? Because the company markets directly to the consumer (no need of any physicians or insurers to muddle the picture) and faces competitors, it has a huge incentive to use the rapidly progressing technologies to make its process more efficient and cheaper. And it's worked. Shouldn't the rest of health care follow this trend? Wouldn't physicians, insurers, and patients want market pressures for companies to make their tests, scanners, drugs, and treatments cheaper? How do we encourage healthy competition to make more efficient and innovative processes, technologies, and products?