Executive Summary

The Health Economics Common Fund Program at the National Institutes of Health (NIH) has supported research to understand how innovations in treatments, diagnosis, and preventive strategies can be most effectively deployed to improve health and well-being. Research supported by this program identifies factors determining adoption of effective health technologies, innovations, and discoveries, so that past and future investments by NIH may have greater public health impact.

In recognition of its last year, the Health Economics Common Fund Program sponsored a research symposium titled Turning Discovery into Health: The Contributions of Economic Research on September 28-29, 2017, on the NIH Main Campus. The goals of this event were to highlight results from Common Fund–supported projects and to stimulate ideas for future contributions of economic research to NIH and Institute-specific missions. Health economics research continues to have a significant role in the missions of multiple agencies at the U.S. Department of Health and Human Services (HHS). Greater accessibility to federal and state data is important, as real-world data will be vital in studying population health.

Participants included investigators conducting research funded under the auspices of the Health Economics Common Fund Program, other NIH-funded investigators working on related health economics topics, and NIH staff. As the final meeting of the seven-year program, the workshop was designed to showcase how the field of economics is useful and important to the NIH mission. The workshop consisted of brief research presentations and discussant remarks grouped in panels moderated by NIH leadership on relevant topics: life cycle of innovations, value of information from and for health research, precision medicine, changing health behavior, and understanding health outcomes. The workshop also featured a roundtable discussion of HHS research priorities. Each set of presentations was followed by a group discussion. The entire meeting was live videocast to the public, and the recording is archived on the NIH Videocast website.

Life Cycle of Innovations in the Health Sector

Incentives play a role throughout the life cycle of innovations in the health sector, which includes patents for new technology, the diffusion of technology among providers, gradual reduction in use of outdated technology. Financial incentives, however, are only one component. Expertise, knowledge, and other provider and practice characteristics appear to be important. Furthermore, fast diffusion may not always be desirable, particularly if it leads to overuse of low-value therapies. The research highlights the need for more information to understand the variation in diffusion of high-value technologies and exnovation of low-value technologies before appropriate incentives can be identified and implemented. The current patent, regulatory, and insurance systems are blunt instruments for rewarding innovation, particularly for prevention.

The Value of Information from (and for) Health Research

Presenters shared research on the different ways that information analysis can support cost-effective solutions. Value of information (VOI) analysis is a method to value proposed medical research. Uncertainty plays a critical role, both in determining the VOI and in projecting results from a trial population to the general population. A key assumption underlying VOI calculations is that new evidence can change behavior; thus, the estimates are affected by diffusion of technology. Findings from VOI studies can help NIH as it makes investment choices, designs new trials, and supports translation efforts. Real-world data present the opportunity to project the real-world impact of a new therapy based on existing trial data without requiring extensive and time-consuming research, for example, by using propensity score weighting methods. Advances in data science have generated unprecedented opportunities to rigorously analyze the value of innovation and how to support high-value innovation. Health economics research provides methods for thinking about how to conduct and use those analyses.

Economic Analysis and Precision Medicine

If implemented cost-effectively, precision medicine (PM) presents opportunities to improve outcomes for individuals. The expected value of individualized care (EVIC) framework, which couples economic modeling with stakeholder preferences, informs understanding of how and when patients, providers, and payers will use or reimburse a PM test. The Rational Integration of Genomic Healthcare Testing project’s simulation model will estimate the value of using  genetic information to inform pharmacological treatment decisions. Presenters noted that existing tests, such as the Oncotype DX, do not provide the expected benefits if patients are unaware that they have been tested or if the information does not influence patient or physician decisions; providing clinicians with tools to better use information and convey it to patients would be beneficial. Benefits may also be improperly estimated when relative risk is used rather than stratified risk in analysis when there are heterogeneous treatment effects. Risk modeling may provide better information on the cost-effectiveness of a treatment and may enable prioritization of treatment or testing.

Economic Approaches to Changing Health Behavior

Neo-classical economics and behavioral economics can inform interventions to improve health outcomes. Presenters shared research in which nudges influenced physicians (e.g., writing fewer opioid prescriptions, choosing less aggressive treatments when appropriate) and patients (e.g., getting flu shots, signing up for automatic prescription refills). Financial incentives encouraged individuals to participate in a wellness program and to take initial steps to cease smoking. Patient incentives may need to be combined with physician incentives when the desired outcome requires both parties to act.

Economic Approaches to Understanding Health Outcomes

Presenters used detailed data and subgroup analysis to uncover trends in mortality rates that are often missed. Reduced health inequality among children indicates that insurance expansion in the 1980s had positive effects. In-depth analysis of increased mortality rates among middle-aged whites with no more than a high school education led to a model of cumulative deprivation that point to the need for social and economic interventions. State policies, such as prescription drug monitoring programs and laws to increase medical access, offer tools in fighting the opioid epidemic. Underlying the research findings is the recognition that the United States spends trillions of dollars on health care and has made significant medical advances, yet segments of the population are experiencing high rates of mortality and morbidity. Participants discussed the need for more comprehensive interventions and preventions requiring continued multidisciplinary research and approaches.


Dr. James Poterba (Massachusetts Institute of Technology and the National Bureau of Economic Research) and Dr. Richard Hodes (National Institute on Aging [NIA]) offered concluding remarks about how health economics research can be used to support the NIH mission of turning discovery into health, as well as the missions of multiple individual Institutes and Centers. The Health Economics Common Fund Program will formally end in fiscal year 2018, but its activities, workshop, and portfolio of funded research from the past 7 years has spurred trans-NIH conversations about how health economics research can strengthen the integration of economic research into NIH’s mission and has provided a body of work on which the Institutes and Centers can build.

Archived Recordings

Day 1 recording: https://videocast.nih.gov/launch.asp?23492

Day 2 recording: https://videocast.nih.gov/launch.asp?23495

(Note NIH Videocasting requires Adobe Flash to be enabled in your browser. Please see Videocasting FAQs for more information.)

This page last reviewed on March 1, 2018