**2. Socio-economy and medical innovation**

In general, since economic trends and the rate of the aging population affect the balance of social security payments that support medical care, recent circumstances have increased the severity of socioeconomic trends surrounding medical care, leading to discussions on increasing the national burden and improving productivity [2]. For example, medical expenditures in the areas of coronary and kidney diseases are growing faster than the gross domestic product (GDP) in Japan [3]. Against this background, the insurance premiums borne by beneficiaries cover only approximately half of the financial structure of the universal health insurance system, and public funds (compensation from general revenue sources with a debt of approximately 30%), which are widely borne by the public, account for nearly 40%.

When discussing health policy as a system, this situation (social income-expenditure imbalance) is regarded as one of the uncertainties concerning a stable supply of medical services in the future.

In other words, social security debt is problematic because whether it can be regarded as an "investment" that can be expected to increase social added value (return) is unclear. However, since the field of pediatric medicine targets the group that will become the working population in the future, it is relatively easy to discuss "investment and recovery" based on the above-mentioned perspective. Additionally, in the field of medical care for older adults, the socioeconomic added value can be discussed while creating new medical innovations and building social models that are beneficial for everyone. We hope that these perspectives will be discussed further in the future.

In recent years, themes related to the sustainability of systems and social harmony in the medical field have been emphasized, and concepts such as Sustainable Development Goals (SDGs) and Appropriate Use Criteria (AUC) have been introduced. Hence, even with the further development of artificial organs and transplantation medicine, socioeconomic perspectives are becoming increasingly significant. Therefore, it is important to realize the economic added value of these medical treatments and share them with the stakeholders. Particularly, it should be reaffirmed that a robust universal health insurance system is necessary to encourage related research and development [4].

For example, an analysis aimed at clarifying the preliminary interactions between Universal Health Coverage (UHC) and medical innovations regarding the security and continued progress of medical services showed that UHC levels and medical innovations (drug discovery) were positively correlated (r = 0.629, R2 = 0.395, p < 0.05; **Figure 1**) through the health economic mechanism (value chain).

This study conducted a correlation analysis using statistical data from 11 countries (World Bank and the Japanese government) on the relationship between UHC indicators and medical innovations. The UHC index was converted into an integral value of the UHC index (0–100 score) and the total population (in millions) while considering the contribution of each level to the population. Focusing on drug discovery as a major aspect of medical innovation, we selected the share of the top 100 ethical drugs worldwide according to the country of origin. Pearson's correlation coefficient was used for the correlation analysis. The statistical significance level was set at 5%. Notably, this figure is represented by a logarithmic transformation.

A country's UHC level is generally affected by its real economy (e.g., GDP) (**Table 1**) [5]. Particularly, the impact of fluctuations in public medical costs is significant. Additionally, the ratio of medical expenses per capita is considered to *Health Economics of Renal Replacement Therapy DOI: http://dx.doi.org/10.5772/intechopen.111526*

#### **Figure 1.**

*An international comparison of correlations between medical innovation (drug discovery ability) and UHC levels.*


*GDP, gross domestic product; UHC, universal health coverage; SCI, service coverage index; S.E., standard error; CI, confidence interval.*

**Table 1.**

*Panel data analysis of the impact of the economic level (GDP, health expenditure, unemployment, and poverty) on the UHC level (SCI). (source: Ref. [5]).*

#### **Figure 2.**

*Progress mechanisms of healthcare and socioeconomic factors associated with medical innovation: Value chain, including UHC. (source: Ref. [4]).*

affect the spread of innovative medical technologies that have been developed [5]. Thus, economic growth is important for promoting medical innovation. Therefore, sustainable and equitable capital investment in medical care (i.e., the improvement of UHC) is crucial. Furthermore, the active expansion of public medical resources is essential to enhance the synergistic effect between medical innovation and UHC. In future, these factors should be systematically discussed as value chains (**Figure 2**).

### **3. Life-saving value and cost-effectiveness**

In the discussion on medical value that advocates the real-world economy, it is generally possible, albeit limited, to evaluate the value of medical services by applying cost-effectiveness analysis and marginal utility theory. The main theories are outlined below. Usually, in microeconomics, the efficiency of service provision is maximized through price convergence based on the supply and demand equilibrium, backed by the fundamental utility theory [6]. Additionally, the prices at which the supply and demand are in equilibrium represent this value.

On the other hand, in the medical field that has a high public interest, the perspective of equity (balance of well-being) is considered along with efficiency. It is necessary to discuss the value of public interest while considering the harmony between the patient's medical care requests (preferences and willingness to pay) and the government's medical finances (income redistribution and fiscal balance). Therefore, the value of medical care should be examined in terms of the balance between utility (health outcomes) and costs (resource consumption) per health program unit, while interweaving the relationship between individuals and society against the background of welfare economics (**Figure 3**) [7].

Consequently, when utility is maximized within a certain budget range, the higher the performance, the greater the utility of the group as a whole and the higher the "value" of stakeholders. Compared with other conceptual discussions, this approach to value assessment in medical care is relatively consistent with the values of the real

*Health Economics of Renal Replacement Therapy DOI: http://dx.doi.org/10.5772/intechopen.111526*

**Figure 3.**

*The concept of medical valuation (application of the utility theory and cost-effectiveness). (source: Ref. [7]).*

economy and daily life (national consensus) (e.g., approximately 6 million yen per quality-adjusted life year [Qaly]). Therefore, it is suitable to examine the value of medical services in the public sector [8].

For example, a Japanese report assessed the value of renal replacement therapy (hemodialysis, HD) for ESRD, whose annual medical expenses are approximately 5 million JPY and the financial burden is approximately 1.6 trillion JPY (**Figure 4**) [9, 10]. This study is significant because it quantitatively demonstrates the socioeconomic value of life-saving and health (HD: approximately 6.5 million JPY/ Qaly). In other words, even with high annual medical expenses and a heavy financial burden, the level of medical fees is appropriate from the perspective of the public's value judgment. This is further supported by the macro analysis based on the international comparison shown below.

In the previous section, it was stated that an increase in public medical expenses is necessary to promote innovative treatment technologies and improve treatment outcomes. The next point of contention is whether the amount of medical resource consumption is appropriate to improve medical outcomes. Part of the answer to this question derives from cost-effectiveness. For example, ESRD treatment costs and public healthcare budget were positively correlated (**Figure 5**). Based on this, when a macro cost-effectiveness analysis was performed on the annual total medical expenses and one-year life prognosis of ESRD, Japan had the best performance compared to other countries (**Figure 6**). Thus, renal replacement therapy in Japan is highly valuable to the general public.

Since the medical insurance system that advocates UHC includes a stable supply as one part of the system, its sustainable development is considered as the most significant medical value to the public. Although there may be variations in the national culture and disease characteristics, it can be inferred that saving lives is the most common value. It is essential to remember that lifesaving not only results in opportunities for other medical interventions (opportunities for disease improvement) but also provides assurance of the quality of life (QOL) in the long run, which

**Figure 4.** *Cost-effectiveness of dialysis intervention (artificial kidney): Hemodialysis versus peritoneal dialysis. (source: Ref. [9]).*

#### **Figure 5.**

*The relationship between patients' medical expenses in the field of end-stage renal disease (ESRD) and medical expenses per capita. Data source: Refs. [11, 12].*

#### **Figure 6.**

*An international comparison of the cost-effectiveness of the clinical system for end-stage renal disease (ESRD). (note) U.S., United States. Data source: Refs. [11, 13].*

is of considerable significance in due course. Therefore, the potential value of renal replacement therapy (HD) is significant.

However, the assessment of medical value involves stakeholders' interests and is affected by the application of subjective outcomes and the macro real economy. Therefore, there are some restrictions on its use, along with difficulties in data analysis and direct recognition. However, against the background of tight medical finances and progress in innovation, cost-effectiveness analysis, which is a part of health technology assessment (HTA), is being actively introduced globally. Based on this trend, medical value assessments are expected to increase.
