Democrats Propose Spending $1 Billion on Ineffective Comparative Effectiveness Research

As my esteemed colleague Katherine Mangu-Ward pointed out yesterday, everyone is using the economic stimulus argument to justify their favorite policy hobbyhorses. Well, here's another one. According to Reuters:

U.S. Democratic lawmakers proposed on Thursday spending $1.1 billion on research to compare the effectiveness of medical treatments, part of efforts to lower health-care costs for taxpayers…

The money was included in an $825 billion tax cut and spending bill unveiled by Democrats on the House of Representatives Appropriations Committee…

"Finding out what works best and educating patients and doctors will improve treatment and save taxpayers money," a summary of the stimulus legislation said.

This is a particular hobbyhorse of incoming Health and Human Services Secretary Tom Daschle who has proposed the creation of a Federal Health Board to conduct comparative effectiveness research. But as I explained last month, such research will not save either patients or the Feds much, if any, money:

Daschle argues that Fed Health "could help define evidence-based health benefits and lower overall spending by determining which medicines, treatments, and procedures are most effective—and identifying those that do not justify their high price tags." Daschle adds, "We won't be able to make a significant dent in health-care spending without getting into the nitty-gritty of which treatments are the most clinically valuable and cost effective. That means taking a harder look at the real costs and benefits of new drugs and procedures."…

But will comparative effectiveness research really reduce health care spending, as Daschle claims? Not by much and not soon, according to a 2007 report by the Congressional Budget Office (CBO), if the research is limited to comparative clinical effectiveness.

Why? Because obtaining comparative effectiveness information costs money, too. To get a preliminary estimate of the benefit/cost ratio of comparative effectiveness research, the CBO used as its starting point a 2008 bill in the House of Representatives which would have established a Center for Comparative Effectiveness Research. The CBO calculated that the new Center's outlays would amount to $2.4 billion over 10 years. Then the CBO estimated that Medicare and Medicaid would save a total of $1.3 billion through reduced expenditures as a result of the comparative clinical effectiveness research. Spending money on comparative effectiveness research would cost $1.1 billion more than it saves the federal government over the next ten years. These amounts are tiny in comparison to the $2.3 trillion that Americans spent on health care in 2007.

The CBO concludes, "Generating additional information comparing treatments would tend to reduce federal health spending somewhat in the near term—but the effect may not be large enough to offset the full costs of conducting the research over the same period of time." In other words, determining comparative clinical effectiveness—determining that certain treatments are better others—simply will not result in big health care savings.

Besides being an ineffective waste of money, the new bureaucracy could well slow down patient access to new drugs. Come to think of it, that might save the feds some money.