i want to come back to where we started and talk about what i think is a complex system that could be transformed by a few key things that will answer many questions most of it relying on sharing communication. if we look at the picture in academia, incentives that exist are not about research, if you start to dissect where it is coming from. there is a lot of funding of the same kind. if you look at hot molecule's many that are being worked on today are the same ones being worked on since the 1990s. the genome has given us 500

product and we're working on ten. that is the first thing. how do we get there? sharing information. biotech and pharma have issues with globalized markets. other models need to be moved in andlicensing with more interesting and diverse structures. they are on a patent clip for the significant loss of revenue. anyone working with academia, anyone working on the same thing in the industry. if it is not working and we see it come in the door we cannot tell pfizer that we saw the same thing and why it is not good. sharing information could help drive them. i have some dollar figures about current target which is a paint receptor or you can look at a

$460 million investment where only in phase 1 doing similar things. medical device companies presents and challenges because small business has a different set of concerns and needs and one of their challenges is the reimbursement environment and sharing information could help promote better outcomes in that sector. i will try to be quick. this is clearly a huge issue for diagnostic companies because they rely on adoption by physicians to get their product out. clearly a huge issue when we think of personalized medicine. they don't know what is in the label or how to practice with drug combinations. we have to get information out

to them. patients are key consideration. there is concern about the regulatory uncertainty. we need to invest in practical science. it is the valley of death between discovery and product. we need investment. it is not something an individual sponsor will do. it has to be done collectively. we think we have an important role in bringing together companies, academia and ourselves where we can begin to address these predictive talks which will be essential to shifting that curve, driving that costs and allowing companies for personalized medicine. they're getting lost in this equation. they don't know what they're supposed to do and information rich society, we have to get accurate information out there so they are an informed consumer with their health care equation.

i want to talk a little bit about what we're doing better very innovative. along the lines of sharing information. we are involved in a project to establish a public/private partnership. we view this as an enormous access to a gold mine of information. they failed where they succeeded. there was a tightly guarded company secrets. and a lot of really important information. it is about product fees but really about asking fundamental questions like an end point. newt gingrich talked about neuroscience. it is a better an end point. we look at that in control group data. we could look at placebo affects

and abrogation of data across type i diabetes with fundamental questions let glycine control. i really think the key to changing the conversation even at the level of review which is clearly something we hear about a lot goes to this issue of creating collaboration around complex scientific information and differing protection so it is not clear what it is telling us. we are engaging the company right now with a number of listening sessions. we are really trying to get out there with the patient community with the academic community to figure out how he has an agency

i will review some economics we need to keep in mind. talk about the attempt to measure value based pricing in the united kingdom and say a bit about the risk sharing development. the speaker hit upon this. we need to remember information is global public good. we talked about hiv drugs. it is important to keep that in

mind by an unregulated private market. we created incentives around hadn't assistance, incentivized innovations. subsidized basic research. we talked about comparative effectiveness research and the public good it is. we also have public good aspect around basic science. we have been talking about both of those things and they are in need of these incentives to improve innovation. how do we measure value? difficult to do. we developed methodology with a lot of limitations. you will see that that is currently the main tool we have at the moment. important to recognize limitations and we start thinking about how we can improve that to stimulated novation. we have to think about how to

modify that methodology. that methodology is called cussed utility analysis. we are concerned about health outcomes and reducing costs in the short run. the outcome is a measure you have probably heard of measures length of life and improvements in patient morbidity with a single index and allows us to compare outcomes for technologies. this is used extensively in pharma logical economics and probably easiest to of fly. more difficult to think about applying it in reimbursing physician or hospital care. we have resource relative scale for physicians and in patient care which administered pricings, not really well aligned in value so we do a better job factoring value in

the pharmaceutical sector in terms of measuring it. so we also need to think about short-term static efficiency and long term me efficiency but economists recently brought out this idea. our current system says let's look at the current price. someone talked about the drug budget. we have a limited perspective with the current price. in the current situation, the fact that we are not looking down and thinking about when it goes off patent and the price calls for long-term costs we look at it over decades. will probably be considered cost-effective? a lot of things we're looking at eventually become cost reducing when we look at that time scale. the point about dynamic efficiency is the idea that we need to ask not just cost-effectiveness but are we even sitting the optimal amount

of innovation of effectiveness research and basic science research. we have push and pull incentives to do that. in our system we currently have pricing for drugs and other countries negotiate with governments. in the u.k. there is free pricing but they're talking about moving to a system of negotiated pricing and calling value based pricing and how are they going to do that? they are starting with the idea of building on the current system that they use by the national institutes. it calls for 20,000 pounds for quality and becomes a value based price. they realize the limitations of

falls memberships, and made adjustments for diseases and improving patient rapid access and looking to try to how to measure the innovation. it is important to recognize the global public good sense, important thing about science is it is cumulative and there are other areas. we have this could provoke quote to reveal information about your technology. that makes it cumulative. that allows for realities to other fields. somehow we need in rewarding value to think about whether there's a premium we should pay for scientific novelty or those spillover effects or take short-term views of where it is getting us today. a few seconds left. at the university of washington

we have a database with risk sharing agreements. we tracked 97 agreements over the last 12 years. the majority of them were in the last three or four years. they are increasingly moving evidence development. they implemented things. we have come to a lot of transactions costs. it is not that easy to pull these off and there will be a limited number of circumstances where we can use them but they will provide valuable information. we need to recognize the barriers and see the potential too early to tell if that is going to have a major impact on the way we deliver care. i will stop there. >> sean, and to you and your work with medicare and technology policy. you have a lot of opportunities

to work on data to and that medical innovation. thanks for the invitation. when i walked in this morning i heard newt gingrich talking about massive innovation, he talked about henry ford and the right brothers. my heart sank because i am thinking steam locomotive and shovelling coal. sunday i will think about how to reinvent the fda. a simple piece of this puzzle which in some sense has a solution is not too ethereal. when i think about innovation and value a common feature of the defining value is what health benefits are achieved at what cost.

a simple non each a month value with health benefits and health outcomes. you can think about that without what leads to important health benefits in the future. i want to talk about the fact that we are pretty dysfunctional when it comes to a common understanding of important health outcomes and without being able to define that clearly and consistently across the health system it is hard to talk about how to reward value or incentivize innovation. what i was going to use as an innovation of this with a simple example of psoriasis and important health outcomes when it comes to drugs for psoriasis so primary influence for approval of drugs for psoriasis is a clinician judgment about the severity of the disease and extent of the disease, sickness.

the food and drug astray agent that reviews this won't consider any patient reported outcome that all as a meaningful outcome that could potentially be included on the label. whenever a patient might report a meaningful benefit from innovation, it won't be steady because it can be reported on the label. there are a bunch of different patient reported outcomes included on various labels but those essentially look at whatever product developer brings in and so the outcomes that are included in the label are sort of all over the map but not consistently reported across any product. there was an interesting discussion at the geopolitical excellent club when they burn looking at approval of these drugs. they talked to patient groups

and it turns at what is really important to patients went comes to psoriasis is severity of the impact on the face and on joints. there are no measures official involvement and joint involvement in any of the trials. there's no validated outcome measure of what is most important to patients. nobody bothered to ask the patient before they started developing outcome measures. there developed by a bunch of psoriasis doctors around the table who came up with what they thought might be important and that became the validated.com. so that is what we know about psoriasis. then if you go to any of a number of different payers and ask them what are the important outcome the usual response is bring is what you got and we tell you if it is good enough and in that circumstance whatever you have got is just about good enough but not quite good enough. when you are looking at things

backward, always, you were so close. and it was mentioned here that you are inviting companies to come in and talk about what might be important outcome is to measure in trials and not her report from one of your employees who basically ran himself ragged running around world trying to figure out what were important outcomes for ruined of arthritis. it seems to me that this is not an insurmountable or implausible problem but it requires a kind of dialogue and very in the weeds level starting with what actually matters to patients. do we or don't we have validated measures that can be reported for those things, come to some agreement between cross payers

but also with the regulators about what are important outcomes and perhaps even some wiggle room about what can be reported. if they're going to do these trials with meaningful health outcomes that connection report them as opposed to being prohibited by marketing rules from being able to report those outcomes. it seems to me until we develop a process for identifying important health outcomes and being able to measure them consistently across trials and have the key decisionmakers, regulators and payers harmonize the line around those things we will have a cacophony of information and no possibility of them thinking intelligently about value or innovation to the extent that value depends on being able to measure meaningful up comes. that dialogue and that process could be done. it is not rocket science but it

does require folks who don't usually talk about this sort of thing to actually work together. >> let me pick on that and open it up to the rest of the panel. there were some common themes about the importance of having better information and outcomes and the potential for developing partnerships, better, understanding, most important, information to collect and working together to collect it through using newer infrastructure and electronic data systems to make that happen. seems like a big set of challenges especially in the longer term outcome and spillover effect from innovative technologies. many more benefits of some of their own machines and applications initially. those are hard challenges but sounds like you think there are some steps to address them.

>> it is difficult to measure spillover. maybe there's -- we may just say that there is an average premium for scientific innovation that we want to award and i don't know how we would implement that. if we use the value methodology we use in our field we may underestimate the value. we looked at the case of perception frivolous and -- the mechanism was identified in 1984 we had no indication until 1998 that was considered a borderline cost-effectiveness and the u.k. didn't approve it initially and eight years later in 2006 there is an indication graduate, breast cancer. so the company set the price too low. the innovation reward for subsequent indication was too low so we face the problem even

in the case of one drug and two elevations of how to pay for the value. to we have a system that will be flexible about that? we need to think about that if we want to reward innovation. >> station reported outcomes are critical and we need to find better ways to a understand patient care and it is not just pr 0s. will also be better, accurate, objective measures of disease progression in the post market sense. part of the challenge from the consumer perspective is a drug under an nba gets approved one day. nothing has fundamentally changed about the drug between one they preapproved and post approval and the perception is dramatically changed into what the safety profile is in and the potential benefit. a large part of this will be engaging in a discussion with patients not just about what

they care about this whole issue of risk benefit. to me this will be medical society by medical society. physicians are engaged and patient groups need to be engaged. is one of the major issues underlying the challenges. and the regulatory agency is trying to sort through the rest benefit equation. i also think we need better objective markets. the on the p r o side, in my view we really need to work hard and markers for predicting tops. this is one of the major issues confronting the post market world. and data sources become increasingly available in academics and other people looking at outcomes they're going to find signals. they will find safety signals and then the question becomes what is the truth and who

adjudicates it. in my mind the tools you have available to you once you identify a signal on not necessarily subtle and have major implications and what we all want our markers for people who are at risk for cardiovascular liver toxicity. we don't have those. i don't think we will get it from an individual sponsor. this is a collective issue that needs to be addressed by all parties involved. it needs to be companies and academia and regulatory agencies. just echoing that issue will have a significant impact on free and post marked medical development in the pre-market but also what happens once a drug is not on the market. >> i agree with that. one comment i was going to make, this is the data infrastructure.

people talk about registry and using administrative data and all this stuff. one of things that worry about is the creation of the infrastructure because there's so much information already, not necessarily lining up with those things that are essential like bio marker information or the things that matter in terms of decisionmaking because we create infrastructure that provides information which is hard to know how to interpret as far as comparative effectiveness because it hasn't been designed with that notion of what users really need to know. all i am saying is it feels to me like before we get too far ahead on the front of creating infrastructure we need to make sure we are simultaneously thinking about what it is we absolutely have to know if it turns out to go back to the last example what we need to know is

how badly face and joins are involved because it is senseless to compare product, you can't just hope infrastructure that doesn't have information is never going to be useful. you have to at least start with a conversation of what people need to know to make a decision. >> small companies and start ups, at i see for myself and predictability and uncertainty. those are the things that kill little companies boat from the regulatory reimbursement and patent side. they make it hard to raise money. in terms of this idea of sharing information i think lot of little companies would share more of their information or what they're seeing more doing if there was a flip side. some predictability guaranteed to them in terms of the profits they would have to follow along any of these paths that represents uncertainty. every day that goes by barron's money that i don't have for the

next day or that are have to raise. the difference is trying to figure out what information is important and the most efficient information and reasonable time line. the speed of start ups versus the speed of government are very different. the startups don't have a limited funds for taxpayers to fund us. one of the things that could be of help to a lot of innovative companies is payers know what they would like to see. are there any guidelines you can put out that would say if you can do this, pick something easy as a model or pilot because i can do all the things i want and another company can do what they want but the payers, if you do this over this period of time it is a starting point for some dialogue because otherwise small-company is feel payers love young patients who never

use the system or old people who die suddenly. that is not the u.s. health-care system. is about improving health and value and productivity. if there's a way that payers could come to the table with that approach it would help small companies understand how they could contribute to that. >> i would like to open this to a few comments from the audience. you already had one turned. >> thank you. i want to ask the question under a significant societal issue which is the issue of soldiers with traumatic brain injury to follow on newt gingrich's speech this morning because we are talking about this long war of 150 to 200,000 of the soldiers

faced with tb are. how do we work on that, of considerable use to our military and how do we do that through this public/private partnership? >> if you start with that that does fit with your comment about the need for better markers for showing where we are. >> i had a conversation with howard hughes medical institute and we had an opportunity. a don't know if you know that there is this really amazing institute in virginia. what are you working on over there? what cool mineral networks and innovative stuff on the computational side. how would you feel if we came in and proposed one of the big

problems with clinical trial settlements with health disease or the neuroscience. what if we started thinking about taking that incredible brain power and channeling it to start with practical issues in the real world today so we're going to engage in a dialogue about that. he was very open and interested. i really think this is going to be identifying problems and taking a more engineering approach which is identified the program and identify people to work together to solve it. the project by project bit, we're going to have to tackle some of these things but i also think we need to keep in mind learning what we can from past experience and it will be important by engaging these diverse communities there will be a change in the conversation. i really think there will in terms of different perspectives

brought to bear on these problems that done in a very monera style of fashion. point the me and a further to industry and regulatory agencies and the pair and the physician and the patient. it doesn't work very well. each of them has an important part to play in the problem. >> time for one more? >> change my comment to make it relevant to this. another problem that we face which two of the highest measures. it is not like hypertension and commercial development here. we really have to encourage people. another example is not a very common -- upper arm injuries are not very common. fortunately barbara took the sun as a problem.

otherwise it wouldn't have passed and with shrinking markets, small markets for various rare diseases but even some reasonably common but not gigantic leap common things that is the problem. . the government has to do a lot of this. we don't have enough money to do all of this but will be important. just in general. basically some horrible things happen, of the divide between research and care coverage with evidence that we're working and point of care research for people remain in the health care system, that is changing and it will require a whole new policy to and do that. privacy issues, all kinds of issues will come up when we try

to make a patient a research subject. that is important to think about. >> that does seem like where we are headed. with this emphasis on patient focused outcome, pain reforms that we talk about on the care side, how do we get better results for patients, becoming much more focused around data that involves the patient's ongoing care. >> related to this, important public health issues like traumatic brain injury. this model that has been used in the global community to intense market commitments that you know more about than i do but this notion of not just counting on government support but creating contractual arrangements where certain benchmarks of being able to create treatments that address these problems there's a sort of guaranteed reward that

is sufficient -- [talking over each other] >> we should be willing to pay more for value in these circumstances. >> thank you all very much for the discussion. [applause] >> i am pleased to move to our closing -- [inaudible] >> into this last battle already. i can think of anybody who would be better to take us back to the big picture of medical innovation and getting more value from medical innovation and making the development process more efficient and effective for patients then peter orszag who is vice chairman of banking get citigroup and a member of their senior strategic advisory group and in addition he serves as an adjunct senior fellow at the council on foreign relations.

january of 2009 through january of 2010 he was director of the office management budget responsible for oversight of the administration's budget policy for implementation of a wide range of policy initiatives and federal regulatory action, in major role in health care reform. that interest in effective health care reform including focus on technology innovation goes way back into his career. i know from my personal interaction with him that when he was director of of the congressional budget office and when he was working at the brookings institution as a senior fellow and deputy director of economic studies. he has co-authored a number of books and is a currently a member of the council on foreign relations. please join me in welcoming peter to the podium. [applause] >> it is great to be back.

let me say a couple of remarks about the broader context in which we find ourselves. it is now all well-known that the rate at which health care costs grow is the primary determiner of long-term future that can be seen very clearly from this chart. social security is projected to rise from 5% of the economy to 6%. medicare, medicaid and other health expenditures are projected to rise 5-1/2% to 12%. our success or failure at containing future cost growth will be more important determinant of the long-term fiscal future than the deal that was just reached on discretionary spending or other measures under discussion of important though there are. what you are struggling with in this room is the fiscal problems

facing the united states. more specifically with regard to the topic of this conference, most of the analyses that have been done on cost growth in the united states a very large share comes from technology related changes in the health sector. in the bottom row, order of magnitude of half of the cost, crucial role on a going forward basis. but if that is the only story that was out there this would be a very easy conference to attend and it would be clear what should happen. the complexity comes because many of those technological advances have significantly improved health outcomes. this chart and tries to account for the decline in mortality from coronary disease in the united states over a two decade period, half of the declines were experienced, half of the

decline occurred because of changes in health risk factors and in particular decline in smoking and so on and so forth more than offsetting the increase in obesity. and the other half came from medical devices or technology and the central tension -- we cannot afford to open ends cost increases driven largely by technology or primarily by technology but on the other hand we don't want to lose the advantage in health outcomes associated with a variety of technological improvements. a further problem is medicare and medicaid play such a central role in our overall health system and our political system has become increasingly polarized. there's a new book called the

big sort. we are increasingly moving into politically segregated neighborhoods. republicans are moving into republican neighborhoods. democrats are moving into democratic neighborhoods. social psychology shows when you put like-minded people to get there they go to extremes. that is exacerbated by gerrymandering and blobs and cable use -- news cycle and the result is an increasingly dysfunctional political process. this is not just an impression. you can measure probability that republican votes for democrats or democrat votes for republicans and by that measure of polarization we were at abnormally low levels post world war ii and started to increase in the 1970s, higher than it has ever been. that is a fundamental problem facing a system that relies too a significant degree at its heart on medicare and other federal programs.

the face of these various challenges there are two conceptual approaches. you heard about a more consumer direct approach. you certainly hear a lot about that from representative ryan. back to him in a moment. the other approach is focused more on providers and trying to drive value in service of incentive providers. these approaches are not incompatible land can be done in concert but there's a question about relative emphasis even in a combination approach. the fundamental theory of the case behind the consumer direct approach is the fundamental reason we don't have more value driven through technological change is consumers don't have enough skin in the game and if they did they would drive increased value. the fundamental limitation is even under consumer direct approach we would have very deep

third-party insurance against high costs like health savings account which is one of the most salient manifestations of the consumer direct approach. you have full insurance above thresholds. and most health care costs are driven by that. if you rank them by costs, and account for 85% of costs. consumer direct approaches have their biggest effect on the other 75% of beneficiaries who are below the threshold. until we get some traction, not as much as often promised. there has been a lot of discussion on mr. ryan's approach which embodies consumer directed plans for the future of medicare. i want to be very clear.

mr. ryan's plan does reduce federal expenditures on medicare. it not only does that but provide greater certainty on paper. it is a great accomplishment. we reduce federal expenditures and shift to beneficiaries. the whole theory of the case reduced overall costs. we bring down overall costs. the first thing is reduction in medicare expenditures relative to the baseline from $8,600 to $1,000 in 2020 to. that part is clear. when we were shifting to beneficiaries no great shape. you had some benefit from

increased consumer choice, you didn't get that much traction, more than offset by higher administrative costs or private insurance plans and less negotiating leverage than medicare with the result being that it was not that you just shifted cost on to beneficiaries with no reduction in overall costs. is much worse than that. you are shifting costs to beneficiaries and costs go up, not down, because those factors dominated any benefit from increased consumer directed behavioral change. to a shockingly large degree that grows over time. this plan which is often held by over -- reducing overall costs evaluated by the congressional budget office does not reduce overall health care spending on the backs of seniors. it raises the overall health-care costs on the backs of seniors. i don't think that has gotten as much attention as it should.

newt gingrichth presumably set but i understand his comments this morning that that just demonstrates yet again how silly the congressional budget office is. what i would say is two things. i actually take his criticism quite seriously. i did when i was director of the congressional budget office. i invited him in to present what is approach would mean because it is easy to say we should take into account new developments and scoring. it is harder to know what that means. that meeting never took place. it is easy to critique omb and cbo. they're not perfect. the relevant question is the specific, credible alternative to the system we have in place and that i have not seen. if the consumer direct approach has limited benefits and some harm in terms of overall cost if

you believe the most recent congressional budget office assessment what are we left with? fundamentally we are left with a provider value approach in which we recognize that those high-cost cases, 25% of beneficiaries are where the money is and we recognize in those cases to a first approximation the health care delivered for most americans is what the provider is recommending. if you combine those two observations the only way you will contain health-care costs over the long term is by affecting what providers are recommending and what is that? that entails two reenforcing things. the first is a much better information flow. over the next decade, next five to ten years we have a significantly expanded health technology backbone in the united states. that hold backbone will create a lot more information than is

available in registries and refused well in the comparative effectiveness research setting, could feedback on clinical decision support software bait and -- based on the h i t system. i would want to walk into my doctor's office and not fill out the annoying paper forms a, of the doctor permission to access my records and have the doctor have a set of best practice guidelines pop up from one of the professional bodies about oncology and so forth and click through to the underlying information about those protocols to see if my individual circumstances very from the best practice protocol. it would be reinforced and one of the things that was left out unfortunately from the elf act is a change in medical malpractice system, not along the lines typically proposed where all you are doing is in

putting caps on liability but instead getting up the fundamental premise of medical malpractice which is based on the best practice methodology. or common practice methodology. you have to avoid liability. you have to do when the guy down the hall is doing. that defines common practice. the common practice standard is nebulous, often not fully scientifically informed. it would be much better to have a safe harbor for evidence based guidelines by professionals. if my doctor is following the professional body, and can show that he or she did that-not be able to sue the doctor. in an ob gene was and setting where 90% of the problematic babies were not because of a mistake by the doctor in the hospital but births are complicated, if you can show you were following the best practice

guidelines you would be liable for medical malpractice. the other thing that needs to happen is a change in payment. currently we are paying for a quantity. we need to pay for quality. easy to say, hard to do. to close on that, given that we need to take politics out of the equation under mr. ryan's approach trying to take politics out by empowering consumers but without giving a lot of specificity about how we would alter the payment system towards the value instead of quantity except for a bank shot from consumers which may not work. indeed also in newt gingrich's comments i had a chance to look over the written comments. there's nothing -- a lot on let's put more money into research. not much more on how to make

sure research is oriented towards the value and not more. in paragraph vii a bunch of pilot project and experimentation which is exactly the approach adopted in affordable can act. where does that leave us? the key issue at this point is much of what was discussed on the previous panel that i had an opportunity to hear which is what do we mean by value? how do we measure it? different approaches exist abroad and there may have been discussion of that earlier. in the pharmaceutical setting in france, there are five categories based on the degree of advancement for improvement in a new drug. in austria and there are three categories for the same topic. there are a variety of proposals floating around to move in that direction in the united states and i don't see a significant

alternative. it is hard for me to argue against reimbursement rates. depending on whether there's a significant advance or a trivial advance from a new technology. doctors pearson and block have an idea that has been proposed to reintroduce new technologies for drugs in the united states for some period of time. if after that period they have not shown improved medical efficacy relative to existing technologies it is not that you wouldn't allow those technologies to be reimbursed but just be reimbursed at the rate of the old technology. getting at the same concept which is if you have not improved medical efficacy you don't get paid more than existing technology. we don't have new technology for new technology's sake but new technology to improve outcomes and value. to close on this if you try to

get that up -- proposal through the normal legislative process in the polarized political environment time mentioned you don't have a very good chance. one of the reasons the administration put so much weight on taking politics out of this system including through the independent payment advisory board which in this polarized environment changes default so proposals are adopted unless they are specifically overridden as opposed to the opposite, one of the reasons it did that is to encourage innovative new value based payments systems oriented toward value into the system in a more facile way than the current system. i guess i would close by saying there have been many criticisms of that fundamental approach. some of them warranted, some of

them exaggerated. but given the absence of a clear path way from an exclusively consumer direct approach to any significant cost reduction let alone actually avoiding cost increases the problem we have to be asking is what is the plausible alternative? it is easy to keep talking and talking about hard to move forward. we need to avoid this spinning around in circles because that entailed a future that is utterly and sustainable and we need to be moving aggressively toward a new health-care system backed by more intense health ip, reinforced by effectiveness research and with an evolutionary approach to a better payment system that emphasizeds value and not quantity. thank you. [applause] >> let's move to the middle

little bit. i know you do. we have a few minutes for a little bit of a wrap up discussion and i wanted to start that out by picking up on your comment about politics and the approach to reform being divided along beside of providers and consumers side incentives and reform and you mentioned in passing that maybe they're not all that in conflict and it is more of an issue of emphasis. i wonder if we could build on that a little bit more. hearing from some of the earlier panel's, they do see this as reinforcing each other. in particular they are trying to set up health insurance plans where if you have a chronic disease and go to providers who do a measurably better job of reducing complications and using that evidence based medicine you

tried, they would get substantial -- just because they are a high-cost individual doesn't mean they can't get financial benefit from making the most of the evidence out there and taking advantage of information in particular on providers that are using better evidence on what is available on medical technology and patients at the lowest cost. that is the reason behind the emphasis that paul ryan and others put a very powerful force. is it really that much in conflict with the provider side reform that medicare and other payers might not take directly? >> if all you do is put your chips down on consumer directed health care which effectively with respect to my friend mr. ryan what his budget does, probability that he will succeed strikes me as an exceedingly

low. the cbo analysis underscores it is not a risk free thing to do. even if you continue to implement the program you don't have such backlash as was written on paper. in order for the combined approach to work you need two things. you need more comparative effectiveness research. it is hard to know how consumer under a pure consumer direct approach would really know whether that an r i is worth it or not without more -- that has become so politicized. the irony is comparative effectiveness research should be among the only things to be drafted a very few number of limited number of things that both the pure provider perspective and pure consumer perspective agree on because you need it to work. the second thing is as you move

away from the appeal or consumer direct approach to all we do this at a premium support approach and assume that will feed into better incentives for technology and utilization, you need to worry about assuming you are not in the extreme the incentives under medicare. how do you take this benefit and start migrating them towards fee for value? if you dial back those two key things, you are in a world where the consumer and provider side come in to play. not only would the refers rate to be effective but you would also want copayments to be affected by the degree of new technology. >> that is something medicare should potentially -- >> we have time for one or two comments from out the year.

you want to start? >> one of the problems with the politicization was the comparative effectiveness research in legislation was no decision on coverage could be made based on that research. really stunning actually. and made some people happy but clearly didn't serve. how do we get beyond that? >> there are a variety of manifestations of polarized environment in which we find ourselves. this is a much broader problem. you are asking a narrow question. is a much broader problem. i do not have the answer. the polarization reflecting the structural change, at this point the technical debate about how you measure value which remind me of the right discount rate

which becomes philosophical at some point and at some point you need to move forward recognizing everything is perfect. those issues strike me as much less challenging than the fact that our country is increasingly t oo '. a

reflection of the deeper dallas's of expenditures found that medical devices represent 6% over a decade. with respect to pricing, the device growth pricing was lower than cpi, lower than medical cpi and other measures. the benefit technologies which are tremendous and health care system itself as procedures moved from inpatient stays to brief outpatient visits and patients gained new abilities to live independently on their own without the resources of their spouse or family members. in the broader context, vast improvements in health care for health status of seniors in particular is underrated and not

considered to the full extent it should be. these are important when you consider recipes for reducing the cost risk. >> you mention medical devices. medical devices are small share of pharmaceuticals. you keep walking through the array of what most people describe as devices and technology and medical innovation. indy if you look at the cross-country comparisons it is not like one area has a higher cost, one subject has higher costs than other countries and that explains what is expressed for about different -- yet again, that is why i put up the chart on mortality from coronary diseases showing benefits of technologies. the question is whether we are getting as much as w