Taking note: comparative vs. cost-effectiveness

Taking Note
June 24, 2008
Comparative vs. Cost-Effectiveness
The idea of “comparative-effectiveness” research has become a hot topic in health care circles. Conservatives are adamantly opposed to it—as are drug-makers,
device-makers and even some physicians who have become involved in designing and profiting from new tests and procedures. They don’t want to see their
products and services subjected to head-to-head comparisons with the less expensive rivals that they hope to replace. After all, they know that they might lose. As
medical research shows, often, what is “newest" isn’t best. And with billions of dollars at stake, who wants to be a loser?
But if you think that any mention of comparative-effectiveness research pushes buttons, try talking about appraising the “cost-effectiveness” of medical products
and procedures—i.e. asking whether the benefit justifies the price tag. For example, is it really worth paying $100,000 for a drug that will give the patient an extra
six months of life?
Often, the two ideas are confused. Indeed, those who oppose health care reform argue that any attempt to set up a Comparative-Effectiveness Institute (aspresidential candidate Barack Obama, among others, has suggested) inevitably puts us on a slippery slope headed straight toward making medical decisions basedon “cost-effectiveness.” Before long, the conservatives say, Medicare will be denying treatments simply because they are too pricey. Yet, is it such a terrible idea to take cost into consideration? In a recent issue of the Annals of Internal Medicine, the American College of Physicians (ACP)
argues that the United States needs to invest in a national entity that would generate information on both clinical comparative-effectiveness and
cost-effectiveness. According to ACP, by failing to make such information available, we undermine efforts by payers, physicians, and patients to make effective,
informed choices that optimize the value they receive for their health care dollars.
In the same issue of the Annals, health care economist Gail R. Wilensky, a senior fellow at Project Hope, disagrees, arguing that it is “vitally important to keep
comparative clinical effectiveness analysis and cost-effectiveness analysis separate from each other.” If you talk about “comparative-effectiveness”
and “cost-effectiveness” in one sentence, you could doom both ideas.
Measuring “Clinical Effectiveness”—the U.K. Model Before choosing sides, let’s clarify what measuring “comparative-effectiveness” means –and how it is different from what we do today. One might think that wealready test treatments to make sure that they are more effective than existing products before welcoming them into the marketplace. One would be wrong.
The FDA requires only that new nostrums are tested against placebos—proving that they are better than nothing. The FDA also asks that the sponsor shows that
the benefit of the “new, new thing” appear greater than the short-term risks. (Trials rarely last long enough to measure long-term risks.)
Manufacturers are happy with the present system. “We’ll never have comparative-effectiveness Research in the U.S.” a staffer on the Senate Finance Committeerecently told a friend. “The drug-makers and device-makers don’t want it.” Yet other countries do feel able to stand up to the lobbyists, and these governments insist on head-to-head comparisons to help health care providers determine
which treatments are best. In the United Kingdom, for instance, the National Institute for Clinical Excellence (NICE) reviews new and existing medicines,
technologies and treatments.
As I explained a few months ago: “A NICE appraisal embraces all available information. During the review process, an independent academic centre draws togetherand analyzes all of the published information on the technology under review and prepares an assessment report. NICE then consults with patient groups andorganizations representing health care professionals, as well as the manufacturer of the product undergoing appraisal. As part of the process, medical products arecompared to similar products made by rival manufacturers, and those competitors also provide input.
In the end, NICE makes the decision, and the National Health Service of England is legally obliged to provide funding for drugs and procedures recommended byNICE. NICE also sends out guidelines to hospitals and doctors, recommending which products and procedures are likely to be most effective for patients who fitcertainly profiles. These are not “rules”; health providers are not required to follow the guidelines. NICE recognizes that every human body is unique; guidelines willnever cover all cases. Nevertheless, doctors and hospitals comply with NICE’s recommendations 89 percent of the time.
But NICE doesn’t just compare the benefits of two treatments; it goes a step further and considers just how cost-effective they are. Do the benefits of a given
treatment justify the price tag?
NICE’s decisions can be controversial. For instance, last year, when NICE ruled that four drugs for patients suffering from early-stage Alzheimer’s disease
(Aricept, Reminyl, Exelon and Ebixa ) were not “cost-effective” because they had “only a small clinical effect” on patients suffering with mild symptoms of early
stage Alzheimer’s, drug-makers decided to push back. Eisai, which manufactures Aricept, and Pfizer, which distributes the drug in the U.K., took NICE to the U.K’s
High Court.
This was the first time that NICE’s procedures have been tested by judicial review—and NICE came out victorious. The court ruled that NICE had arrived at itsdecision fairly, and that the drugs should be covered only for patients in the later stages of the disease.
Are Americans ready to let a U.S. version of NICE tell Medicare which Alzheimer drugs it should and shouldn’t cover based on price?
Probably not.
Unlike comparative-effectiveness research, which just picks the better of two treatments, regardless of how much they cost, cost-effectiveness is all about money.
Here the decision is based on whether the treatment is just too expensive to justify its use. The implicit premise here, of course, is that we should do a cost-benefitanalysis and establish a threshold beyond which health care consumption and spending is unreasonable and counter-productive.
This means that the sky is no longer the limit. Quality must justify cost. Here, it’s important to realize that it’s not just drug-makers, device makers and some highly-
paid specialists who object to this idea. Many Americans are not yet willing to set limits. Doing so means answering questions like “how much is a year of life
worth?” Are we willing to spend more for that extra year if the patient is 12, and less if he is 80?
The UK has set such limits. But the UK’s healthcare budget is much smaller than ours. This means that they must make some very difficult decisions. Because we
have so much more money sloshing around in our bloated health care system, we can save billions just by concentrating on effectiveness.
This is not to say that we aren’t paying too much for many treatments. Today, decisions about what will be covered are made, implicitly, by the FDA—and the FDA isnot allowed to consider prices. Meanwhile, once the FDA approves something, Medicare usually agrees to cover it. And since Medicare gives a product itsimprimatur, most private insurers follow—and pass on the cost in the form of higher premiums.
The problem, as noted, is that the FDA’s standards for approval do not require that the sponsor show comparative benefit. As a result, not long ago, the FDA
approved a cutting-edge expensive cancer drug that would give the average patient an extra 10 days of life. How many patients will be told that the benefit is so
small? The high price will make many assume that this must be a “breakthrough” product.
Yet, even if the FDA is approving pricey products that are only marginally more effective, than an older generation of drugs, this does not mean that the public is
ready to let Medicare ration treatments based on cost.
Emphasis on “Cost-Effectiveness” Could Torpedo Research that Compares Benefits What is certain is that even if we’re not ready to talk about “cost-effectiveness,” the U.S. does need to institutionalize comparative-effectiveness research
so that programs like Medicare can get 'smarter' and focus reimbursements on the most beneficial, proven treatments. Doing so would let us pare our health care
spending by as much as $358 billion over ten years, according to Merrill Goozner, who cites a Commonwealth Fund study released in December.
In other words, even without worrying about the cost of a product or procedure, we could be saving “anywhere from one-third to two-thirds the cost of
covering uninsured,” simply by letting head-to-head trials winnow out the less effective products and services. There is that much low-hanging waste in the
system.
And strategically, it would be a mistake to follow the NICE model and couple comparative-effectiveness research with cost-effectiveness research within the sameinstitute, Wilensky argues, because trying to do both at once may well turn comparative-effectiveness research into a huge political target.
While there is widespread interest in a comparative-effectiveness program, “don’t confuse that with widespread acceptance or support,” she warns. Wilensky, who
has served as an advisor to President George W. Bush knows that “Until this idea becomes law, it remains just a beautiful but fragile and vulnerable
concept.” And even if the idea does becomes law, “the sustainability of such a center will only become clear after it survives the first comparative clinical
effectiveness information that contradicts conventional wisdom or endangers the latest therapy du jour.”
“The use of cost-effectiveness information is more politically contentious and its modeling more technically controversial than comparative clinical
effectiveness,” Wilensky adds. “For these reasons, I believe that payers should do cost-effectiveness analyses, not a national entity devoted to the
development of comparative clinical effectiveness data. Because clinical effectiveness is the most basic and costly step in learning how to spend smarter, it
should proceed first and in as politically protected a manner as possible."
This is not to say that Wilenksy doesn’t want information comparing cost and benefit to be available: “Like the ACP, I support the use of cost-effectivenessinformation as an element in decision making by physicians, patients, and payers for developing smarter strategies of reimbursement.” But unlike the ACP,Wilensky does not want a national comparative-effectiveness institute charged with ruling on cost-effectiveness.
This is a job Wilensky would leave to the payers: “Cost-effectiveness information should be an important consideration in setting reimbursement rates by public
and private payers. If an intervention doesn't do more, why should a payer pay more for it? If it does do more, asking how much more and for what additional price
becomes relevant. Payers will have to make difficult decisions, and different payers may make different decisions."
“Whether Medicare will be granted the right to use cost-effectiveness information in setting reimbursement rates is unclear, although the
history in this regard is not promising,” Wilensky acknowledges. “The first attempt happened when I was the administrator of the Health Care Financing
Administration (now the Centers for Medicare & Medicaid Services). The proposed rule was never released from the Office of the Secretary of Health and Human
Services because of concern about potential future ‘misuse’ of this authority.”
Wilensky is right. Even though the prestigious Institute of Medicine issued a report in January calling for a “single entity” to produce “credible, unbiasedinformation about what is known and not known about clinical effectiveness,” this is hardly a done deal.
As Merrill Goozner observed in April: “Powerful forces are mobilizing to make certain any comparative effective agency established by Congress remains a
toothless tiger.” Already, he noted, “the Advanced Medical Technology Association, which represents device makers, insists that “governance of any public-private
entity should include representation of all stakeholders.”
Meanwhile, “a recent article in the Journal of the American Medical Association—which likened a potential [Comparative-effectiveness] Agency to a FederalReserve Board for medicine—also called for putting ‘stakeholders’ on the board and having input into its studies,” Goozner observes.
But “no banks sit on the Fed’s board,” Goozner noted. “And its studies are conducted by researchers who are scrupulously clean of financial ties to the banks
they regulate.
“It’s one thing to give stakeholders a chance to advise the process – just as they have input through comment and testimony into any regulatory proceeding.” This iswhat NICE does. “But,” Goozner argues, “to allow industry representatives to sit on the board, and ask clinicians with conflicts of interest to conduct its studies,would undermine the new agency’s credibility at the start – and doom it to being just another babbling voice in the health care wilderness.” Goozner is right. We need to make sure that any agency that oversees comparative-effectiveness is insulated from the lobbyists. They should consult and provide asmuch information as they have. But they shouldn’t vote.
In the end, we have to pick our fights. Insist on the head-to-head studies and insist that they are overseen by someone other than the product’s sponsors. There
we must be firm. But leave questions about cost-effectiveness for other payers—insurers and employers can begin that investigation.
As Wilensky observes, we shouldn’t jeopardize a comparative-effectiveness program simply to please private insures: “Payers—especially private payers—
would dearly love for [a comparative-effectiveness] center to do cost-effectiveness analysis because they could then share the onus of implementing the
results of difficult, contentious, unpopular studies with a reputable national entity. Their desire is understandable; however, from a long-range
perspective, the wiser course is to leave cost-effectiveness analysis out of the scope of work of a national comparative clinical effectiveness program.”
Wilensky has been in Washington for quite a while. She speaks with the voice of experience.
Posted by Maggie Mahar on June 24, 2008 in Health Care | Permalink | Email this post TrackBack
TrackBack URL for this entry:http://www.typepad.com/services/trackback/6a00e54ffb9698883300e5536cbd998833Listed below are links to weblogs that reference Comparative vs. Cost-Effectiveness: Comments
The comments to this entry are closed.

Source: http://www.cavalue.com/webdocs/Comparative%20vs.%20Cost-Effectiveness.pdf