Will Comparative Effectiveness Research Kill More People Than It Helps?

Consumers, not bureaucrats, should make healthcare decisions.


Better health care at lower cost. That's what comparative effectiveness research promises, but can it deliver? A new study argues that federal comparative effectiveness research won't generate cheaper, better medical care to the American public. Instead, it will force cuts in pharmaceutical and medical device research and development, resulting in 32 million lost years of life and economic losses totaling $1.7 trillion.

Among lots of different possible treatments for a disease, comparative effectiveness research (CER) aims at figuring out the relative effectiveness of different medical interventions. As President Barack Obama explained, "If there's a blue pill and a red pill, and the blue pill is half the price of the red pill and works just as well, why not pay half price for the thing that's going to make you well?" Sounds very sensible, right?

A provision tacked onto the $787 billion stimulus package passed by Congress in 2009 aims to help find those half-price blue pills. Various federal health bureaucracies received $1.1 billion to spend on comparative effectiveness research. Opponents worried, however, that federal CER is the first step toward rationing treatment based on cost-effectiveness determinations made by bureaucrats. 

Asked if CER might result in rationing health care, Centers for Medicare and Medicaid Services Administrator Donald Berwick stoked this concern. "We can make a sensible social decision and say, 'Well, at this point, to have access to a particular additional benefit [new drug or medical intervention] is so expensive that our taxpayers have better use for those funds,'" replied Berwick. "We make those decisions all the time. The decision is not whether or not we will ration care—the decision is whether we will ration with our eyes open."

In a passionate 2009 editorial in The New England Journal of Medicine, Harvard medical professor Jerry Avorn, denounced the conservative "backlash" against CER. He praised Congress for not letting "warnings of a dystopian scientific police state undercut the nation's need to learn what works best in medicine." 

Yet, even Avorn acknowledged CER raises important issues such as the question, "What is the moral responsibility of the physician to care for a patient for whom the best therapy may not meet conventional standards of cost-effectiveness?" Berwick suggests that one way to confront this dilemma is "at some point we might say nationally, regionally, or locally that we wish we could afford it, but we can't."

But will CER achieve its goal of improving health care while simultaneously lowering costs? A new econometric study [download here] by University of North Carolina health care economist John Vernon and Robert Goldberg, president of the non-profit Center for Medicine in the Public Interest, argues instead that CER will likely increase costs and worsen health outcomes. 

This deleterious outcome is primarily the result of how CER would affect pharmaceutical and medical device research and development. Vernon and Goldberg argue that pharmaceutical and medical device researchers would have to respond to CER regulations by increasing the size and, thus, the costs of clinical trials. Consequently, CER would delay the arrival of new treatments on the market and slow the rate of technology diffusion among clinicians. Ultimately, CER increases the risk of investing in research on new treatments.

Clinical trials account for nearly 30 percent of the cost of developing a new drug. Vernon and Goldberg calculate what various increases in the costs of clinical trials would do to investment in new drugs. In their most conservative scenario, they assume that the CER boosts such costs by 50 percent, which they estimate would reduce R&D spending by about $32 billion over ten years. Earlier research suggests that every $1,345 invested in pharmaceutical R&D produces an additional life year in the U.S. Conservatively assuming that people value an additional year of life at $50,000, they reckon that reducing R&D by roughly $32 billion will result in roughly 34 million lost years of additional life amounting to about $1.7 trillion in losses. Less conservative estimates push up the losses to $4 trillion.

Vernon and Goldberg correctly note, "Healthcare costs are the focus of most policy considerations because this demand is heavily subsidized by taxpayers. This subsidy, rather than the value of what is spent on healthcare is the main concern of legislators." The more we centralize health care decisions into government bureaucracies the fiercer the political battles over that subsidy will become.

The reason we need federal CER, Avorn argues, is that while "of course, many new interventions clearly are better…we have no systematic way of collecting or disseminating such information." Of course, in other areas of our economy we do have a way of disseminating information about the costs and benefits various products and services: markets.

In a February 2010 New England of Journal of Medicine perspective, Harvard University health care policy professor Milton Weinstein and Dartmouth College health care economist Jonathan Skinner suggested how markets could resolve the cost-effectiveness conundrum. They note that other countries are also confronting the problem determining the cost-effectiveness of various treatments. In the United Kingdom's centralized health care system, the cost-effectiveness of treatments is determined by the National Institute for Health and Clinical Excellence (NICE). That agency, in general, will authorize a treatment if it costs less than about $50,000 per added year of life.

So why not turn the new Federal Coordinating Council for Comparative Effectiveness Research into something like NICE? "Americans have less tolerance for command-and-control regulation than those in many other countries, so it is unlikely that a NICE-style structure of explicit rationing will be acceptable to Congress and the American people," observe Weinstein and Skinner. They add, "On the other hand, Americans appear to be more accepting than Europeans of the role of price in allocating health care."

Markets are brilliantly effective mechanisms for collecting and disseminating information about the costs and benefits of products and services through prices. Weinstein and Skinner suggest that people be allowed to choose among various insurance policies, some of which will be cheaper because they will pay initially for inexpensive drugs and only switch them to expensive ones if necessary. On the other hand, other people might purchase a more expensive policy that gives immediate access to higher cost treatments.

Weinstein and Skinner do caution, "Any incentive schemes, whether linked to payments for individual services or to bundles of services through insurance packages, are subject to the caveat that patients may make unwise or irrational decisions." Yes, but I suspect that Americans will be happier making their own trade-off decisions (unwise as they be may), instead of being subjected to those made by supposedly wiser and more rational federal bureaucrats.

Until now, government health care subsidies in the form of Medicare, Medicaid, and SCHIP have been effectively unlimited. Something like Rep. Paul Ryan's (R-Wisc.) proposal to turn Medicare into a voucher program in which seniors would purchase private health insurance would introduce competition. Ryan's proposal would shift making health care tradeoffs from bureaucrats concerned about public budgets to consumers concerned about their own budgets. This would put downward pressure on prices and tend to rein in health care costs. Price competition might even reduce the amount invested in pharmaceutical and medical device R&D. In any case, consumers, not bureaucrats, should be the ones making comparative effectiveness decisions about health care.

Ronald Bailey is Reason's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books.

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  1. federal comparative effectiveness research will force cuts in pharmaceutical and medical device research and development, resulting in 32 million lost years of life worth $1.7 trillion.

    Sometimes I think Americans are living in Pleasantville . There are other countries who do research and development; are we even still #1?

    1. I imagine we’re still way in the lead. For now.

    2. Regardless of where the research takes place (Japan, France, etc) the high prices in the US generate a significant portion of the demand.

      1. demand? So only Americans need medicine? Shit, hc must be fantastic in the rest of the world!

        1. The US is the only country with 300 million customers, each paying more than anybody else in the rest of the world. If that demand fell by even 10%, that would be a pretty big deal.

          1. Poor pharmaceutical giants. We need to give them more subsidies!

        2. Other countries artificially limit the demand by placing certain denying certain treatments in the name of cost savings.

            1. All national healthcare systems ration. You can’t walk into a hospital in Canada and jump into a bed. A lot the rationing is pretty subtle, for example, longer waits don’t necessarily seem like rationing at first.

  2. another dorm room plan that postulates if we cut open the goose that lays the golden eggs, we can have all those eggs now.

  3. The market, huh? How’s that working out for Matt Welch? You know, the guy who couldn’t buy an insurance policy at any price, because he went to the doctor too much? The idea that you can buy a cheap policy when you’re young and healthy and then switch to a more expensive one when you’re old and sickly, that’s precisely how the market doesn’t work. It isn’t just “patients” who make decisions. The insurance companies make decisions too, and the first one they make is not to sell policies to people who look like trouble, like Matt “went to a doctor once too often” Welch.

    I could take the articles Ron cites more seriously if they acknowledged that consumers and insurers have different goals: the consumers wants as much care for the money as possible, while the insurer wants to provide as little as possible. It’s sometimes embarrassing for people like Ron when they see insurance companies giving incentives to employees based on the number of claims they can disallow, but really, that’s just the brilliantly effective market at work. Because insurance companies exist to make money, not to save lives.

    1. Making money saves lives. All the work and brilliance of generations of productive money makers is the reason you don’t burn animal dung for warmth.

      1. Nice.

      2. Making assumptions about what people do and don’t do with animal dung, are we?

      1. Holy shit , not you!

    2. AV: With due respect, I have addressed some of your concerns in other columns, e.g., Markets, Not Mandates.

      1. ADDRESS AWAY. You still Ain’t right

    3. Insurance companies exist to make money, not to save lives.

      Are you even aware how ridiculous this is? Who’s going to give an insurance company money if they refuse to save lives?

      “Farmers exist to make money, not to feed people and keep them alive.”

      1. People that work for companies that have insurance as a benefit?

      2. Um.. farmers probably exist to make money and make their land profitable so they don’t have to sell it. Besides, doctors and hospitals save lives. Health insurance companies exist to provide coverage to people who they bet they won’t lose money on.

        1. Y’all aren’t missing the point, are you? It’s that trade occurs for mutual benefits. A farmer’s main goal is not the sustenance of the nation, it’s making money. That’s why he doesn’t do it for free.

          Insurance companies, likewise, find that they can provide a service (insurance) for less than people are willing to pay for it. And if, as Vanneman presupposes, they feel no compunction to provide that service, in a market with minimal switching costs (such as we have now, and would have even more of in a truly free market), consumers are free to leave.

          It’s ignorant of the fact that almost everyone in health care (and certainly doctors) provides care primarily for compensation. If they were forced to do it for free — or less than they could in another job — they’d stop. Certainly some have a passion for what they do, but let’s not pretend skilled professionals work out of altruism.

          1. If they were forced to do it for free — or less than they could in another job — they’d stop. Certainly some have a passion for what they do, but let’s not pretend skilled professionals work out of altruism.

            The point your comment misses is that if they are doing their job right, healthcare providers save lives. That’s what they get paid for. But the way current healthcare insurance is structured sets up an incentives for insurance company workers such that doing their job means denying their customers the very service the customers thought they paid for. It is not that insurance companies don’t get paid to save lives, they get paid to avoid saving lives…so to speak.

      3. You are missing the point. Insurance companies do exist to make money, not to save lives, but since they can not make money without “saving lives”….they; save lives. All companies, at least successful ones, are in business to make money. Only a dick wad liberal would think otherwise.
        And yes, “Farmers exist to make money, not to feed people and keep them alive.”

    4. “Because insurance companies exist to make money, not to save lives.”

      If an insurance company gets a reputation of being overly stingy on claims, how many people are going to buy insurance from them? If no one pays premiums. they don’t make money either.

      1. If an insurance company gets a reputation of being overly stingy on claims, how many people are going to buy insurance from them? If no one pays premiums. they don’t make money either.

        The mechanisms by which many/most people in the US get health insurance largely insulates insurance companies from these market forces.

    5. You act as though the government somehow is this angelic entity, completely unmotivated by greed or anything other than altruism. Citizens and government often have different goals. Individuals have a desire for virtually limitless consumption. That’s one of the reasons the government wants to get more involved in the health care market, to get costs down. This represents a fundamental conflict, one that can only be solved if rationing takes place. The desire for unlimited access to the best of everything is not solved in any way by the government, which wants to contain costs, being the arbiter of claims, as opposed to insurance companies, who also want to contain costs. The only major difference is that the government can eliminate its competition through force, while private insurers can’t. All of your claims about how bad private insurance is are not solved by a government run system. Indeed, the government system, as with pretty much any government program, would just cost more.

      1. good points all.
        I would add this: the article is about comparative effectiveness – which boils down to, just as with an insurance company, what the gubermint will and will not cover.
        But as the estrogen and numerous other studies have demonstrated, what is the best treatment (or diagnostic tests – breast cancer screening at 40 or at 50???)often takes many years and many studies to discern. Once there is a gubermint imprinteur on a treatment protocol, the freedom to challenge it is seriously compromized.

        The true of the matter is that the “standard of care” is that you will not be cured. Progress comes by trying different treatments, and different drugs for different conditions than they were initially approved for.

      2. Medicare has 1/10 the overhead of private plans.

    6. Heaven forbid, a company refuses to do business with someone that looks like trouble. Your noble doctors would welcome all those troublesome customers who do not pay, because the doctor works to save lives as you state.

  4. Fuck this comparative effectiveness bullshit. Most phase one studies are done by white men in college looking for a quick buck to go on a beer binge next week. What about the rest of the population that will be taking the drug?

    1. those “white men” cured or prevented polio, small pox, women dying in childbirth, all manner of infections, changed the world so that human life is not one of unceasing misery, pain, and poverty. we now all expect to be pain free, relatively healthy, happy, that our babies and moms should not die in birth and a million other things. and if it is not the white men, it is the science that they invented and discovered. populations are booming all around the world because of the measures of white men. aids is no longer a death sentence because of white men. babies in africa are being saved from dying of diarrhea because of white men. more people have more to eat and cell phones and tvs and clothing to wear because of white men. african americans don’t die from high blood pressure because of white men. is there a price to pay for all this? of course. what exactly would you take away then, who should be deprived of what?

      comments like this about EWM (evil white men) are one of the things that turned me to the right

      1. because of white men

        Well, not by themselves. They had help from non-white, non-men as well.

        1. “They had help from non-white, non-men….” Cite!!!

    2. I belive you mean intelligent white men!

  5. Between WWII and the mid-1990’s there was a British institution called Giles; a cartoonist who drew 3 single panel cartoons a week – about halfway between Political Cartoons and slice of life humor.

    Giles started his career as a dedicated Socialist. By the mid 1950’s he was regularly making fun of the inadequacies of the National Health.

    Think about that; a man whose initial political sympathies were socialistic, living in a nation that can be said to be the parent of our own, and in the 1950’s he is ALREADY poking fun at the NHS .

    Maybe we can do better. But I doubt it.

    1. We already know we have done worse

  6. I’m confused. Mr. Bailey refers to “federal comparative effectiveness research” and wrote, “Various federal health bureaucracies received $1.1 billion to spend on comparative effectiveness research.” But then he cites others to the effect that CER regulations could inhibit privately funded research. No help reading the PDF, which just seems to assume people know what these regulations are, whether they’re directly tied to the federal expenditure on research, or whether it’s just speculated that such research will eventually become mandatory. Can anybody here clarify?

  7. We touched on this in a piece we wrote yesterday on California’s latest flirtation with single-payer. It’d be nice if there were a scientific solution to the resource allocation problem in health care services; unfortunately, neither CER nor cost effectiveness analysis provides that solution.

    The problem with CER is that it’s almost never a question of “why not pay half price for the thing that’s going to make you well?” It’s things like comparing two drugs for mental health problems, where you don’t have a good way of measuring their effectiveness. Or like comparing diagnostic technologies that, by themselves, don’t actually make you better. Or like evaluating a new therapy that’s the only treatment available for a particular condition. Or like studying treatments for rare conditions, where you’ll never be able to conduct a large trial. The problem with CER is that it’s very difficult to do in exactly the sorts of situations where it would be useful.

    And any health policy wonk can’t discuss cost-effectiveness analysis without bringing up the Oregon Plan. We’ve tried using CEA to allocate health care dollars before. Aside from the fact that the politics took over the process, CEA methodology is inherently weak, and criticisms of it are almost always justified.

    1. “It’s things like comparing two drugs for mental health problems, where you don’t have a good way of measuring their effectiveness.”

      I need to reread the CATIE study but I believe one of the outcomes measured in regards to effectiveness between neuroleptics vs. atypical antipsychotics was frequency of hospitalization.

      If the point of taking an anti-psychotic medication is to reduce symptoms of psychosis, which is associated with the probability of being hospitalized, then in my opinion you can compare 2 different classes of drugs (and comparisons within classes of drugs) and the comparisons will be meaningful.

      How this information is utilized (i.e., implemented) is another matter. If the healthcare provider is allowed to make individualized decisions regarding what he/she believes will work best for the patient in front of the provider, effectiveness research may be a tool to guide treatment trajectory rather than shooting from the hip. The continuity of care problem occurs when the provider and patient are removed from the health service provision equation.

  8. “..subject to the caveat that patients may make unwise or irrational decisions.”

    There is no such thing as an irrational decision if you properly constrain your evaluation of the decision to its immediate effects. Taking Tylenol to prevent heart attacks, forgoing vaccines on Jenny McCarthy’s advice, and consuming massive doses of colloidal silver are all perfectly rational decisions because the immediate purpose of those decisions is not to prevent heart attacks, or avoid autism, or cure whatever colloidal silver is claimed to cure. The immediate purpose of those decisions is to BELIEVE that they will lead to something good.

    I don’t eat breakfast in the morning because it will sate my appetite. I have no way of knowing that. Even if it’s worked every previous day of my life, I cannot KNOW that eating breakfast will end my hunger. I can only know that I BELIEVE eating breakfast will end my hunger. In fact, I really only believe that there’s a good chance eating breakfast will end my hunger.

  9. I have this vague memory of some recommendation being made on the basis of comparative effectiveness recently…something about….uhm…errrr…was it mammogram schedules?

    Yeah! It was wasn’t it>

    How did that turn out anyway?

    Congress took the recommendations in hand and implemented them because the experts said it made sense, right?

    No politicization at all, right?

    No sign that some diseases might be more equal that others, right?

    Just a careful, rational effort to get things as right as possible, all directed by Top Men, right?


  10. With all due respect, Ron, your previous post does not address the “Matt Welch” issue at all. Nor does this one. I’m curious to know if competition in the medical industry worked prior to WWII as you claim it would today.

    1. No healthcare system can save everyone. If the dude had that many issues he was probably doomed regardless. Complaining about one guy who couldn’t get health insurance would be like complaining that Obamacare will be unable to save my 105 year old great grandmother. Yes we’ll admit it private health insurance doesn’t work for everyone, but neither does your solution. If neither solution works perfectly I prefer the one that doesn’t bankrupt the nation.

      1. Better to bankrupt families with Medical costs than to pare down the largest Military Establishment the world has ever seen. Yeah, Right!

  11. the problem determining the cost-effectiveness of various treatments

    They just need to put Helena Chmura Kraemer on the job.


    You know, Q-ROC analysis?



  12. I think the benefits of comparative effectiveness research is to help the company earn more money

  13. Thomas Sowell wrote a book called Knowledge and Decisions which is about what happens when the people with the knowledge don’t get to make the decisions and instead people with power who are far removed from the scene of what they want to affect make the decision, which they can do because they have power. their main concern is their power, not the health care or the factory or the company or the school or whatever it is.

  14. I’d feel better about consumer-based decisions if health care companies didn’t spend so much time & money trying to manipulate consumers.

  15. HSA = patient autonomy and self-rationing. The days when a patient couldn’t research a condition, options, different providers, etc are gone.

  16. Comparative effectiveness studies suffer from political, methodological, and complexity issues. AHCPR dared to find, by reference to good peer reviewed literature, that many, perhaps most patients for spinal fusions would be better off, both financially and clinically with Manual Manipulative care from a Chiropractor or Osteopath.
    AHCPR was defunded before the study of headache and neck pain could be finished.
    Current efficacy studies are done by comparison with placebo, but very seldom are old vs. new drugs intended for a particular condition tested head to head. Even less often are different treatment approaches, such as Chiropractic vs. Opioids and Relaxants for management of chronic back pain.
    The confusion and obfuscation available in making choices of experimental design, statistical analysis, and policy inferences are difficult even for specialists with years of College classes on the topic.
    Comparative research is essential, but the Cochrane process of amalgamating existing studies with very different populations and interventions is just not getting it.

  17. I just got the ultimate supercharger for my 1998 BMW. They came out a few years ago and aren’t made anymore, but i was determined to find something that met these particular specs, set myself to the task, found the perfect thing, located one and paid a dairly hefty market premium for it but now i’m good to go (fast!).

    The point is, i had a hard-ro-meet need and fulfilled it without the guidance of government mechanics – now just imagine how good i’d be at ferreting out treatment for some rare disease, presuming of course the cure wasn’t even nastier and i didn’t prefer a well-calibrated dose of kindly poison from a trusted provider at whatever the going rate for that was at the time.. i’ve already got funds earmarked for Dignitas for the latter eventuality, do you?

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