Democrats Propose Spending $1 Billion on Ineffective Comparative Effectiveness Research

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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.

NEXT: Holder Makes Lindsey Graham Smile and Civil Libertarians Cringe

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  1. So costs aside, are the benefits of this research worth it in other areas?

    That seems as important a question as any here.

  2. I’m wondering if Daschle is another hack who thinks health care is or should be a “right.”

  3. Neu: If it didn’t cost anything to obtain, such information would be good to know. But what is it that you’re trying to say?

  4. Since unlimited health care is impossible this is nothing but an attempt to put a pretty face on the list of approved procedures in the forth coming National Health Care system.

  5. So costs aside, are the benefits of this research worth it in other areas?

    Of course there are. They are self evident. Only an oppressive market fundamentalist fanatic would disagree.

  6. Since unlimited health care is impossible this is nothing but an attempt to put a pretty face on the list of approved procedures in the forth coming National Health Care system.

    Why be so negative? Of course we can care for everybody and that IS the pretty face of the coming National Health Care System.

  7. Aren’t medical treatments something that have to be tailored to the patient? Yeah, maybe you can say which treatment is the most cost effective, but deciding what treatments are actually worth trying has to be done case by case. As far as I can tell, any way.

  8. No Ska! Individualism is bad! The government knows what is best for all of us. If only the right people were in charge…soon enough they will be!

  9. If they give me the $1 billion, I will provide my effectiveness research:

    Good blow is totally worth a higher price. Real coke is much more “effective” than fillers like speed. Or get a Ritalin prescription and it’s even legal.

    There. Where’s my money, bitches?

  10. Since unlimited health care is impossible this is nothing but an attempt to put a pretty face on the list of approved procedures in the forth coming National Health Care system.

    DrRich agrees:

    In other words, Fed Health will not be able to discuss publicly the medical services that are, say, at least partially beneficial in a substantial minority of patients, but are too expensive to cover. Instead, they’ll have to say, “This medical service doesn’t work, so providing it is wrong.” (If providing it is wrong, then withholding it is not rationing.)

    Thus, the strong tendency for administrators of our universal healthcare system will be to divide the galaxy of medical services into two broad groups: Those services that are highly effective and/or relatively inexpensive, which will cheerfully be provided to one and all; and those services which will be declared (after careful study and analysis) to be completely useless and probably harmful (not to mention expensive), and which will not be covered.

    Furthermore, any health professional who attempts to provide services from this latter category (since those services are ineffective and harmful) will be guilty of crimes against humanity, and will likely forfeit their careers, life savings, and freedom. Indeed, DrRich supposes that the Obama administration may eventually see the wisdom in keeping Guantanamo open, if for no other reason than to have a suitable venue for detaining these healthcare terrorists.

  11. It seems that Daschle wants to set up the infrastructure to eventually give us England’s style of health care. I’m under the impression that he is a big fan of Englands health care system.

  12. Epi,

    LIFE saving drugs my friend. Not RECREATIONAL drugs. Though thanks for the tip.

  13. Ron,

    Neu: If it didn’t cost anything to obtain, such information would be good to know. But what is it that you’re trying to say?

    Perhaps that the billion would be well spent even if, in the long run, it didn’t save money.

    Perhaps.

  14. in “me-related” health news, I have an appt with a psychiatrist next week. I have been diagnosed with adult adhd and need to make sure I get “the good stuff”. Any advice, hints, tips?

  15. As I understand it, this isn’t a study to see what works and doesn’t work (we have the FDA for that, yeah?), this is a study on cost effectiveness. If it costs more than it saves, and it’s a study about money…

    How exactly can it be well spent?

  16. Neu: If it didn’t cost anything to obtain, such information would be good to know. But what is it that you’re trying to say?

    I don’t knwo if he was trying to say this, but I will:
    That $2.4 billion only results in a savings of 1.3 billion to the medicare/medicaid programs for a net of negative 1.1 billion

    But how much of that 2.3 trillion would it effect? I assume that these results are not going just be kept a state secret and only used by federal programs. (not the greatest assumption these days, grant you) Insofar as this is a loss leader, it may be worth it, if it can translate to ‘efficiency’ in the larger health care market.

    (usual caveats, with the additional one that costs are always underestimated and savings, even systemic ones are always overestimated)

  17. How on earth can the CBO (or anyone else) conclude how much money comparative effectiveness research is going to save without, you know, doing the research? If we already knew that some hot (and expensive) 3rd generation COX-2 inhibitor was not significantly more effective than, say, aspirin, then there would be no need for the research, right?

    What am I missing here?

    This is exactly the kind of thing that might be good to know if you have a chronic condition like arthritis, regardless of who’s paying for your health care. Moreover, I would argue that this is exactly the kind of research NIH should be funding, since there is clearly no incentive for the drug industry to do it themselves.

    The potential holdup in drug development is a fair argument, but one for streamlining the overall approval process, rather than completely dismissing what is potentially a much needed improvement to it.

  18. I have been diagnosed with adult adhd and need to make sure I get “the good stuff”. Any advice, hints, tips?

    Ritalin > Adderall.

    Ritalin delivers a high almost identical to coke (if you crush it up and snort it). Adderall is just speed, and, while fun, is not as good of a high. You definitely want the Ritalin.

    And then you need to give me some.

  19. Epi,

    Sometimes I wonder as to your true identity. Those thoughts turn me to a fantasy land of Tony Montana sitting on a mountain of coke where it rains XTC and the rivers flow with ritalin and clouds are made of meth. Also known as Epi’s Happy Place.

  20. Pharmaceutical spend is only 15% or so of total medical spend.

    All drugs currently on the market will be available as generics within 10 years.

    Therefore this discussion is moot.

  21. Oh, and new drugs are *already* tested against the current standard of care.

  22. bubba,

    Tell that to the President elect and his minions.

  23. see! that research only cost about as much as boiling a pot of water for tea!

  24. FWIW,

    This is a good discussion about one aspect of this issue.

    http://www.amazon.com/exec/obidos/ASIN/0803946120/reasonmagazinea-20/

    and
    http://www.cochrane.org/reviews/

    Is a good source for results of this kind of research. Notice the gaps.

  25. B,

    With competing drug companies it actually is in their best interests to produce a better product than each other. Government has no need to fund such research since the drug companies can do it themselves and then charge for the better quality drugs based on how much they spend in research.

    You know there’s a place people can go to put money into the drug companies pockets…er, research departments…and then get a return on investment when they produce the top selling erectile dysfunction pill. It’s called the stock market and prices are pretty good right now. Once they figure out how to give everyone wood, cancer cures might just be right around the corner.

  26. see! that research only cost about as much as boiling a pot of water for tea!

    Peyote tea?

    Those thoughts turn me to a fantasy land of Tony Montana sitting on a mountain of coke where it rains XTC and the rivers flow with ritalin and clouds are made of meth. Also known as Epi’s Happy Place.

    You left out the painkillers, dude. Never forget them.

  27. Reinmoose | January 16, 2009, 2:40pm | #
    As I understand it, this isn’t a study to see what works and doesn’t work (we have the FDA for that, yeah?), this is a study on cost effectiveness.

    No, if is a study of “effectiveness.” In studies like this monetary costs are a factor, but so are other costs (pain to the patient, training costs, overdose risks, etc…) as are benefits (reduction in recovery time, reduction in pain, etc…).

    This is, of course, included in the justification for the proposal: “will improve treatment and save taxpayers money”

  28. Nick, you’re assuming that the private sector is the best route. As we all know, teh guvmint “Does It Better”. Let them run the show, they’ve done a bang-up job lately.

  29. The big myth here is that we can measure clinical effectiveness.

    The rule in the sciences is that you cannot accurately measure more than three variables simultaneously. However, each clinical case has dozens of major factors that can significant influence outcome. Patient age, race, gender, previous health history, drugs taken before hospitalization (which may be many), drugs given during hospitalization, methodology of treatment (number of nurses, doctor time with patient), etc. Simultaneously measuring all these factors with any accuracy is probably impossible. Even if you did, by the time you combine all the statistical error of all the measurements into one metric, the number you get will be gibberish.

    That is ignoring all the basic scientific controls that you can’t use in a clinical setting (e.g. you can’t give people placebos).

    This is one of those fads that sounds like a no-brainer. Who could argue with scientifically measuring the real world outcomes of common treatments? The problem is that we can’t measure any arbitrary phenomenon we wish to any arbitrary precision and accuracy.

  30. epi, on the peyote note, I am expecting some hawaiian baby woodrose seeds soon. Haven’t decided what to do with them, but they are pretty neat, big ol seeds.

  31. “Ritalin delivers a high almost identical to coke (if you crush it up and snort it).”

    Up to and including incredibly uncomfortable jitteriness if overdone. I found Adderall to be smoother, but I guess Ritalin is superior cause its more intense.

  32. A billion dollars? Pshaw, mere chump change! These days, the government burns through that about every eight hours.

  33. epi, on the peyote note, I am expecting some hawaiian baby woodrose seeds soon

    Never did that; I could always get mushrooms or acid. My hallucinogen stage is over, but I have heard from friends that salvia rocks pretty hard, is legal, and only lasts 7-10 minutes.

    Up to and including incredibly uncomfortable jitteriness if overdone.

    Any stimulant will do that if overdone, including caffeine.

  34. Shannon Love,

    The rule in the sciences is that you cannot accurately measure more than three variables simultaneously.

    Could you elaborate on this rule and where it comes from?

  35. Epi,

    Were you used as the basis for this character?

  36. my salvia stage is over. I now know what it is like to be a sentient coat hanger. I appreciate my sanity more than ever. salvia is by far the most reality warping trip I’ve ever experienced, and it’s scary while tripping because you have no “reality check” to realize you are tripping. It is fortunate that it is so short lived, but not a fun experience at all.

  37. Naga, I actually have a totally insane pimp jacket that would blow your mind. Only worn for special occasions, of course.

    it’s scary while tripping because you have no “reality check” to realize you are tripping

    That does not sound good.

  38. it means you need a sitter, and the intense bit is only like 90-120 seconds, but feels like an eternity. Not for the feint of heart.

  39. Episiarch,

    Will blow my mind when worn or will cause the owner to call me a “john” and pimp slap me for wasting his time and then call me a “sucka fool”?

  40. Well, that depends on whether you are wasting my bitches’ time, and whether you paid them.

  41. Epi,

    Well wasting your time will depend on whether you have Scarlett Johansson on your payroll. If not, then I am wasting your “bitches” time.

  42. Neu Mejican,

    Could you elaborate on this rule and where it comes from?

    It comes from a field called multivalent analysis/statistics.

    Very simplified: When you combine two or more sets of measurements you must add their errors. So say you have three different measurement/variables each with a standard error of +-5%. e.g. 50% improvement with and error of plus or minus 5%. When you combine the statistics you would get 50% improvement with an error of plus or minus 15%. That would mean your improvement was somewhere between 35% and 65%. That alone renders it almost meaningless but such an error would also be larger than the standard deviation in most cases.

    That’s the cliff note’s version.

    The other problem is that at any given time in the U.S. there are probably only a few dozen people with the same exact same clinical profile. This means all you samples will be small, increasing the error even farther.

  43. Episiarch–

    I find Ritalin and coke to be a uniquely “jittery” high even for a stimulant (if that makes any sense). Less smooth than Adderall.

  44. Nick–As I understand it, the proposal is not only to compare competing contemporary drugs, it is to compare newer and more expensive treatments with older, cheaper ones.

    Yes, competing drug companies have incentives to make better drugs than each other. But they also have incentives to convince you to buy their newest drugs while they still hold the patent and can make money on them, whether they are actually worth the additional cost (to you) or not.

    This is why (for example) Schering-Plough has been pushing Claritin-D so hard since loratidine went generic. If you look at the data, it really doesn’t do anything better than the generic loratidine you can get at Costco for ~$0.03/tablet now.

    I guarantee that if Merck/Amgen/Pfizer/GSK whoever were left to do head-to-head trials of a potential blockbuster against something cheap and generically available, there would only be two outcomes:

    1) The blockbuster is much better! Hooray!
    2) The data gets buried.

  45. Who could argue with scientifically measuring the real world outcomes of common treatments?

    Garsh, its so obvious! Without the Gubbamint to require it, there’s no way the providers and third-party payers would ever do anything like this! God knows they have no incentive, none at all, or at least don’t have brains to see the benefits of it.

    Now that we have The Right People in charge, its all so clear to me! Save me, Right People, save me!

  46. Nick–As I understand it, the proposal is not only to compare competing contemporary drugs, it is to compare newer and more expensive treatments with older, cheaper ones.

    Those newer drugs have already had years and years of efficacy studies. They also have defined approved uses, where they have been shown to be effective.

    No, this adds nothing. Except, of course, more debt/taxes, and more loverly, loverly press releases.

  47. Shannon,

    I thought that might be what you were thinking.

    I think you overstate the problem.
    Not that it isn’t a problem, you are just over stating it.

    Clearly, there are ways to handle this problem that allow for valid inferences to be made when more than 3 measures are used.

    If the “rule” you cite were really a rule, very little of the progress made over the last 50 years in fields such as biology, genetics, imaging, neurology, etc… would have happened.

    I mean even if we just stick with the most basic measures, you typically have 3 spacial dimensions and time.

  48. I have been diagnosed with adult adhd and need to make sure I get “the good stuff”. Any advice, hints, tips?

    Ritalin > Adderall.

    He’s moved on to something else by now, Episiarch.

  49. Who could argue with scientifically measuring the real world outcomes of common treatments?

    I thought that’s why we had JAMA and AMA (to name two). My question is, why does the government care about this? I mean, besides the obvious reasons on a runup to a national health system?

  50. Neu Mejican

    If the “rule” you cite were really a rule, very little of the progress made over the last 50 years in fields such as biology, genetics, imaging, neurology, etc… would have happened.

    Well, that’s what makes such progress so damn hard. You have to break problems down into very small chunks and then gradually assemble those chunks. We do the same with medical research. We research each drug or procedure in isolation and then let the doctors integrate that research in a clinical setting on a case by case basis.

    I mean even if we just stick with the most basic measures, you typically have 3 spacial dimensions and time.

    It would make basic spatial research difficult if the instruments we use to measure time and space where not so accurate. Astronomers do have problems making such measurements.

    Measurement is much more difficult than lay people believe. It is the core of science. Figuring out how to measure phenomenon is 95% of the game.

  51. Neu Mejican,

    There is already a mechanism for determining all this and it is self-financing: it is called the price mechanism.

  52. Shannon,

    Measurement is much more difficult than lay people believe. It is the core of science. Figuring out how to measure phenomenon is 95% of the game.

    Now you are understating…I would go with 98%

    ;^)

    But difficult does not mean intractable.
    It is not impossible.

    The other problem is that at any given time in the U.S. there are probably only a few dozen people with the same exact same clinical profile.

    They don’t have to be exactly the same.
    Only meaningfully the same on the relevant parameters. There are likely to be more than 3, but that does not make it impossible to create a coherent clinic group to allow for outcomes research.

  53. Seward,

    Price does not = effectiveness.

    It isn’t even a good proxy for effectiveness.

  54. the nvalue of this study is much greater than the dollar amount associated with it.

  55. econ cannot give his view on this. He scrambled out the back door the second you entered.

  56. Seward,

    No, prices do not equal effectiveness; prices convey information about effectiveness (and a lot of other things). Prices are an information transportation device in other words. This Econ 101, BTW. Now you could argue that the price system needs help in this regard, but that is a different sort of criticism.

    BTW, if you don’t believe me, the next time you buy say a TV, see what the prices of the various TVs tell you about their quality, efficacy, etc. Those prices convey information, and in a very handy, fairly accurate form.

  57. Seward,

    Prices convey information about opinion, not truth.

  58. Neu Mejican,

    You live in a world where price is the dominant means by which information – be it truth or opinion – is transferred between individuals, etc. in the market. And yet somehow it doesn’t convey truth.

  59. Seward,

    Yes, price does not convey truth.
    It convey’s opinion, subjective valuation, yadda yadda.

    A much different thing than truth…particularly when you are talking effectiveness.

  60. Neu Mejican,

    People have tried to live in societies where the price system is suppressed and those societies have been led down a path to disastrous consequences. No government program can create a effective substitute for the price system, because no government program can convey the truth and opinions that the price system conveys.

    I would note that on the issue of “truth” – even if I were to grant you claim you have made – that the effectiveness research discussed here in the write up discusses costs and benefits; subjects which are as much made up of opinion as “truth.”

  61. As a general comment I’d say that one of the major problems with healthcare markets in the West is that they do not convey any cost to most of the folks seeking healthcare. Its one of the reasons why advances in technology post initial adoption cost more in the healthcare industry as opposed to every other industry on the planet.

  62. Seward,

    Are you saying the whether or not a specific treatment for, say a viral infection or a tumor, actually kills off that infection or destroys that tumor is a matter of opinion rather than fact.

    Certainly there is opinion mixed in with medical outcomes, but there are also objective facts.

    Those facts may or may not be reflected in the price.

    If done properly, those facts will be reflected in the results of effectiveness research.

    o government program can create a effective substitute for the price system, because no government program can convey the truth and opinions that the price system conveys.

    You realize that this statement has nothing to do with the issue at hand. The government studying effectiveness does not equal the government using price controls.

    Think of it as a customer conducting research on products prior to buying those products.

    Consumer reports does not fix prices.

    (Side note: do you really think you are providing me with insights on the information value of “prices”? Really?)

  63. Neu Mejican,

    Are you saying the whether or not a specific treatment for, say a viral infection or a tumor, actually kills off that infection or destroys that tumor is a matter of opinion rather than fact.

    No. I am saying what one considers beneficial is often a matter of opinion. But this gets a bit beyond what I have originally stated about the importance of the price system.

    Those facts may or may not be reflected in the price.

    Since the article specifically quotes language about costs and benefits the price will be of apparently of upmost importance.

    You realize that this statement has nothing to do with the issue at hand. The government studying effectiveness does not equal the government using price controls.

    Actually, it does. What? Do you think the government will simply sit on the “findings” that will arise from these efforts? The government already engages in price controls in this area, BTW. So the horse is out of the barn as far as that is concerned.

    (Side note: do you really think you are providing me with insights on the information value of “prices”? Really?)

    Yes, I do. To say that prices do not reflect truth is just, well, silly.

  64. Yes, I do. To say that prices do not reflect truth is just, well, silly.

    To think that prices directly reflect truth about effectiveness/quality is, just, well, gullible.

    Do you think the government will simply sit on the “findings” that will arise from these efforts?

    The action that would most likely flow from these studies is not price control. It would, rather, lead to the government, as consumer, making determinations about which treatments it will buy.

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