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Washington taking a look at
Comparative Effectiveness Research

Thomas Novelli

The prevailing sentiment among most healthcare and budget experts in Washington is that demands on federal resources have reached a critical point. The growth of entitlement spending has risen to a level where difficult decisions will have to be made about the future of several critical programs.

Rising costs for healthcare services and greater federal spending for healthcare programs have created increased motivation towards evidenced-based medicine. Many experts are pointing to the idea of Comparative Effectiveness Research (CER) as a solution to these problems.

There has been a significant growth in the development of medical technologies over the last 20 years. More importantly, clinical benefits have increased because of these developments. Patients are now living longer, healthier lives. However, the influx of developments has resulted in more patients being treated, ultimately increasing costs. For example, patients have received imaging and other diagnostic tests more in the past decade than ever before.

While there is no doubt that these tests are successful in revealing patient conditions, payers are looking more closely at the utilization rates to determine if therapies or tests are reasonable and necessary. Insurers, including Medicare, want to see a greater correlation between the increased allocation of resources and benefits in the beneficiary pool. For Medicare, comparative effectiveness is seen as a viable solution to address this issue.

Comparative clinical effectiveness research has been discussed as an avenue for producing information to help healthcare decision-makers reach informed, evidence-based decisions.

What does “effectiveness” mean?

Most people agree that the research compares the “effectiveness” of two or more healthcare services or treatments. It evaluates outcomes resulting from different treatments or services, and provides information about the relative effectiveness of treatments. Specifics about the research and the definition, however, seem to be sources of contention. In particular, two areas that are the source of the most contention are the definition of “effectiveness” and whether costs should be included in CER.

The underlying structure for comparative effectiveness research has been in place for some time through the Agency for Healthcare Research and Quality (AHRQ). With the economic stimulus package passed earlier this year, Congress moved to make comparative effectiveness research a larger priority of overall healthcare reform. Specifically, in February, Congress appropriated $1.1 billion for the purposes of CER to be divided between the Secretary for Health and Human Services, the National Institutes of Health and AHRQ. In addition to the funding, the new law also established a Federal Coordinating Council, which will provide research priority recommendations to the Congress and Administration.

Comparative effectiveness and costs

A key segment of the medical technology commercialization process is acquiring timely and adequate reimbursement for a product. In any marketplace, this means adhering to competing and many times different standards necessary to gain coverage from both private and public payers of healthcare. Looking purely at clinical outcomes in CER is preferred, and adding cost into the analysis has proven to be a controversial aspect of the methodology. In nations with a substantial portion of health costs being covered by private insurers, cost considerations have become the norm through the process of technology assessments. However, it has become seemingly more controversial to inject cost considerations in to coverage determinations made by public payers of healthcare.

Government-financed health systems walk a delicate line between wanting the appearance of adopting new, innovative technologies and having to control costs in a seemingly smaller pie of public resources. In many industrialized nations, CER has become a standardized process of reviewing and adopting new drug and medical technologies. For instance, in Europe, prior to 1993, most countries did not formally require evidence-based outcome determinations in coverage decisions. However, as healthcare expenditures became a larger slice of the pie, most nations adopted some aspect of comparative effectiveness research. Now, most have a fully established comparative effectiveness component of coverage determinations or are developing such.

The U.S. healthcare difference

The comparative effectiveness model used in other countries may have difficulty in the U.S. healthcare system. One unique aspect in the United States is the strong emphasis placed on the patient-physician relationship. Many believe that this relationship, where the physician will often recommend a product regardless of price consideration, would be threatened if costs were actually to be considered.

For instance, Medicare, the federal health insurance system for senior citizens, essentially prohibits costs to be considered in most coverage decisions. This limitation is premised upon the patient-physician aspect and the program strives to ensure patients have reasonable access to new, innovative technologies.

Problematic in any method of CER is the horizon timeline in which results are compared with cost. If a CER study is looking over short time span after a treatment is initiated, it may only consider the upfront costs without taking into consideration the long-term savings. Savings such as reduced hospital or physician visits, and overall improved health may be lost if a CER assessment is only looking at the initial price tag of a medical technology. As Congress moves forward on broad-based healthcare reform, it is likely that CER will be part of the plan in some form or another. How specific CER plans are designed will most likely be deferred to the appropriate government agencies. Regardless, the cost issue will likely continue to remain contentious.

Thomas Novelli is Director of Federal Affairs for the Medical Device Manufacturers Association. He can be reached at tnovelli@medicaldevices.org.