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Baucus, Conrad Offer Bill Creating Comparative Effectiveness Institute

By John Reichard, CQ HealthBeat Editor

August 1, 2008 -- Two key Senate committee chairmen announced Friday the introduction of legislation (S 3408) to create what a wide cross-section of the Washington health policy establishment says is essential to controlling health costs and covering the uninsured—a public–private institute to foster research into "what works" in medicine.

"The bill would create a nonprofit corporation responsible for setting national priorities for comparative effectiveness research," said Senate Finance Committee Chairman Max Baucus, D-Mont., who joined with Senate Budget Committee Chairman Kent Conrad, D-N.D., to sponsor the measure.

"The corporation, which would be called the Health Care Comparative Effectiveness Research Institute, would be a private entity," Baucus said on the Senate floor. "But it would be governed by a public-private sector Board of Governors. It would not be an agency of the federal government."

Insulating such an entity from political pressures is key because in the past, federally funded programs to study the value of medical treatments have been slashed when findings undercut a lucrative treatment, advocates of the comparative effectiveness research say.

Officials from both federal agencies and private corporations standing to benefit from the research would be among the members of the board overseeing the new institute, which would ramp up to funding of some $300 million per year, according to Baucus.

Now, the federal government only spends $15 million to compare the effectiveness of treatments. "We should devote more than one-tenth of one percent of health spending to study how well health goods and services actually work," Baucus said. Congressional Budget Office Director Peter Orszag has estimated that up to $700 billion a year in health spending could be eliminated through research identifying treatments that do not produce the best medical outcomes.

But other analysts have noted that one person's waste is another person's income. A research agenda that targets the most costly types of treatments and produces findings that shrinks demand for those treatments may not sit well with the individual drug, device and medical professionals affected.

However, the Advanced Medical Technology Association (AdvaMed) and the Pharmaceutical Research and Manufacturers of America (PhRMA) issued statements Friday that sounded supportive of comparative effectiveness research. PhRMA Senior Vice President Ken Johnson said the lobby "supports the development and use of high-quality evidence, including comparative clinical effectiveness evidence, for healthcare decision-making."

Proposals to expand government supported research should promote timely access to needed therapies, he added, "and avoid denying or delaying patients' access to beneficial care, as what often occurs in Europe and Australia." Johnson said "PhRMA will continue to review the details of the bill, and look forward to working with both Chairmen and other members of Congress on this important issue."

AdvaMed CEO Stephen J. Ubl said that the bill "reflects a number of AdvaMed principles on comparative effectiveness and we look forward to working with the bill sponsors as it continues through the legislative process." As Congress considers the measure, "we believe safeguards should be included to ensure that the final determination of what treatment option works best for each patient should be made by individuals and their physicians."

Ubl added that "research should focus on comparative clinical effectiveness, and not on cost-effectiveness—which could lead to decision-making that may not be in the best interest of patients. While the bill does provide for a study of methods for cost-effectiveness research, we are pleased that no such research is authorized."

Baucus said the bill would provide "stable funding" for the institute. It would rely strictly on taxpayer funding from general revenues in its first three years then switch to an "all payer" system with money from both public and private sources. The institute's budget would total $5 million in 2009 and reach $300 million by the year 2013, Baucus added.

A summary of the bill says the measure would appropriate general funds from the Treasury totaling $25 million in fiscal 2010, and $75 million a year in fiscal years 2011 through fiscal 2018.

Private insurers would pay $1 per insured person per year and funding from the Medicare trust funds would total $1 per beneficiary per year.

Insurance lobbies voiced enthusiastic support for the bill despite the fees. "We very much support this notion of a public–private independent organization," Karen Ignagni, president of America's Health Insurance Plans, said in an interview.

"We're happy to do our share," Ignagni added. "This is a down payment on the agenda of most stakeholders, which is to get all Americans covered."

Findings from research sponsored by the institute would be publicly disseminated and could not take the form of clinical practice guidelines or policy recommendations. Ignagni said it would "inform coverage decisions" by health plans but said they would be unlikely to exclude treatments found to be less valuable. Instead, insurers would likely rely on "tiering" to encourage use of the most valuable treatments—an approach that charges lower co-payments for more valuable treatments and higher co-payments for those with lesser value.

"The senators should receive kudos for this and we believe it's the cornerstone of the health reform agenda and should be enacted this year," Ignagni said.

Blue Cross and Blue Shield Association President Scott P. Serota issued a statement supporting the legislation, noting that the Blues "have long advocated for such an entity." He added that by "promoting comparative effectiveness research—not just in America, but worldwide—we can improve quality, value, and expand coverage for all."

It's unclear whether the Bush administration will support the bill, or when lawmakers will take up the measure. A Baucus spokeswoman said "we will work to move the bill this year, but obviously time is very limited. It is important to start serious discussion on an issue important to consider in the context of health reform."

Jeff Nelligan, spokesman for the federal Medicare and Medicaid programs, offered no comment on the bill, saying "we haven't had a chance to review" the legislation.

Health care players are likely to comb carefully through its provisions to determine how much influence various sectors of health care have over the entity. Its board would have 21 members, including the secretary of Health and Human Services, the director of the Agency for Healthcare Research and Quality, and the director of the National Institutes of Health.

The Comptroller General of the United States would appoint the other 18 members, including three from each of the following groups: private payers; pharmaceutical, device, and technology companies; patients and health care consumers; doctors, including surgeons; and agencies administering public health programs.

"In addition to setting national priorities, the Institute would provide for the conduct of research studies that answer the most pressing questions about what works in health care," Baucus said. It could contract with NIH, AHRQ and private entities for research, which would be peer-reviewed. Baucus said it would be required to assess "the full spectrum of health interventions, including pharmaceuticals, medical devices, medical procedures, medical services, and other therapies."

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