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'Comparative Effectiveness:' Can It Really Cut Health Care Costs?

By Mary Agnes Carey, CQ HealthBeat Associate Editor

December 19, 2007 -- While many health care analysts believe that comparing medical treatments in terms of how much they cost and how well they work will reduce health care costs, the precise impact of "comparative effectiveness" research is difficult to predict, with any potential for substantial cost savings taking a decade or more to materialize, a Congressional Budget Office (CBO) analysis concludes.

Comparative effectiveness research compares treatment outcomes from different therapies for the same condition, allowing providers and patients to avoid ineffective or wasteful treatments. Since public sector health insurance programs account for 40 percent of all health care spending, the federal government has an interest in generating evaluations of the effectiveness of drugs, medical devices, and other treatments. Some have suggested adding comparative effectiveness research to the mandate of an existing government agency or establishing a new agency or creating a public–private partnership to perform and distribute the research.

Having the government take a larger role in comparing treatments would tend to reduce federal health spending somewhat in the near term, but that effect may not be large enough to offset the full costs of conducting the research over that same time period, CBO found. To make such research have a meaningful impact on spending, doctors, other health care professionals, and patients would have to change their behavior accordingly. Higher-value care identified by comparative effectiveness research could be promoted with the use of financial incentives, such as in the reimbursements doctors receive or the cost sharing that patients incur, according to the report, released Tuesday.

Many members of Congress believe that comparative effectiveness research holds great promise to help improve health care while lowering its cost. "Comparative effectiveness research will inject common sense into our health care system by improving outcomes for patients and by helping us direct attention and resources to medicines and treatments that work," Senate Finance Committee Chairman Max Baucus, D-Mont., said in a statement. He added that when the Finance panel holds a series of hearings next year on how to overhaul the nation's health care system, "ideas like incorporating comparative effectiveness research into the health system will be front and center."

In May, House members Tom Allen, D-Maine, and Jo Ann Emerson, R-Mo., introduced legislation that would increase funding for research to help health care providers and patients decide which drugs, medical devices, and treatments are the most effective. The bill (HR 2184) would authorize $3 billion over five years for research by the Agency for Healthcare Research and Quality, which already has done comparative effectiveness reviews on renal artery stenosis, anemia drugs used by cancer patients, and other items.

But others believe that savings from comparative effectiveness may be slow and difficult to achieve. An analysis released Tuesday by Avalere Health concludes that a number of factors, such as funding, structure, and scope of research, will define its success. "There are multiple, complex decision along the way to creating a formal CER [comparative effectiveness research] program, and each choice will determine when, if, and how in fact CER can generate a positive economic and health outcomes impact," said Avalere Health president Dan Mendelson.

The Pharmaceutical Research and Manufacturers of America (PhRMA) said that while it supports the development and use of high-quality evidence, including comparative clinical effectiveness research, for health care decision-making, many issues must be addressed in designing such a system. "It is important that any initiative involve all health system stakeholders, operate in a transparent fashion, and recognize the strengths and limitations of different types of research," PhRMA vice president, policy, Lori Reilly said in a statement.

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