Reformers seek more comparative effectiveness information to control healthcare spending

Healthcare reform is a high-profile issue in the presidential election campaign, and drug access has become a central theme in the debate. Both Democratic and Republican candidates have rolled out healthcare reform plans that promise to cover the uninsured while also providing tax breaks and other incentives to help individuals obtain health insurance. All of these changes are costly, and proposals to adopt electronic medical records and better coordinate chronic care are not likely to generate any short-term savings.

Consequently, the candidates are looking for strategies to reduce spending on prescription drugs, largely by expanding access to generic drugs and to low-cost medicines from abroad. Sen Barack Obama (D-Ill) has promised to provide Americans with access to the “exact same drugs in Europe and Canada” that pharmaceutical companies sell at half the price the drugs are sold for in the United States. He plans to save up to $30 billion by repealing the ban on government price negotiations for drugs purchased by Medicare and to increase the use of generic drugs by government health programs.

Similarly, Sen Hillary Clinton (D-NY) promises to hold down fast-rising drug prices by removing barriers to generic competition, allowing Medicare to negotiate lower drug prices, and boosting oversight of drug advertising. She wants to accelerate the approval of new generic drugs and to create a pathway for biogeneric competition to end “the monopoly currently enjoyed by large biopharmaceutical companies” and save $5 to $7 billion each year.

The presumptive GOP nominee, Sen John McCain (R-Ariz), wants to develop “routes for safe, cheaper generic versions of drugs and biologic pharmaceuticals” and “safety protocols that permit re-importation to keep competition vigorous” as part of his free-market approach to healthcare reform.

Comparing effectiveness
A related strategy is to steer healthcare spending to those medical treatments and products demonstrating real-world effectiveness. Comparative effectiveness (CE) research aims to provide information that will help patients and their doctors choose the most appropriate care options. The Medicare Payment Advisory Commission (MedPAC) recommended in its June 2007 annual report that Congress establish an independent entity to sponsor “credible research on comparative effectiveness of healthcare services.” In a January 2008 study, an Institute of Medicine (IOM) committee recommended establishing a national CE research program with “sufficient resources, authority and capacity” to develop research standards and processes. An IOM Roundtable on Evidence-Based Medicine provides a forum for ongoing discussion of ways to improve medical evidence and its use.

The presidential candidates are discussing CE in their respective campaigns. Sen McCain has said that publicizing information on treatment options and developing national standards for measuring and recording outcomes can address the rapidly rising cost of US healthcare. Sen Clinton wants to establish a “best practices” institute to provide better information on what works in healthcare. Sen Obama supports CE research on which drugs, devices, and procedures are the best for individual patients as one way to reduce the “considerable waste in our healthcare system.”

Enthusiasm for CE research is prompting Congress to establish a quasi-governmental CE research organization. Senate Finance Committee chairman Max Baucus (D-Mont) is looking to authorize such an entity as part of must-pass Medicare legislation needed to block a scheduled cut in payments to physicians. Some CE advocates have discussed building on the program at the Agency for Health Research and Quality (AHRQ), which supports CE research to inform coverage and treatment decisions for Medicare and other government health programs. The current thinking of CE research advocates, however, is that an independent research entity will be more immune to political control.

The envisioned CE operation would be able to accept funding from private organizations as well as the federal government, an important consideration as approximately $200 million will be needed just to start such an operation. Any legislation adopted this year, however, is likely to establish only a “placeholder” to launch a CE program and will likely not provide much more than the $15 million that currently supports the AHRQ program.

Insurers and payors have pointed out that the United States is virtually alone among developed nations without an entity dedicated to comparing the effectiveness and value of new drugs, devices, and medical procedures. They see a model for an expanded CE research program in the United Kingdom’s National Institute for Health and Clinical Excellence (NICE), which reviews clinical and outcomes data to evaluate new medical technologies. NICE’s cost-effectiveness assessments help national health officials to establish clinical guidelines and make coverage decisions. However, NICE analyses often take more than a year and can delay patient access to new treatments.

Insurers versus pharmaceutical manufacturers
The prospect that more effective use of medical technology could save billions of dollars has drawn strong support for CE analysis from payors, insurers, and pharmacy benefit managers. At an April briefing in Washington sponsored by the Alliance for Health Reform, Karen Ignagni, president of America’s Health Insurance Plans (AHIP), acknowledged that efforts to establish best treatment processes would be useful in making coverage determinations. Although CE analysis might not lead an insurer to deny coverage, a health plan might put a more costly drug that lacks a clear advantage in a higher formulary tier, she explained. David Nexon, senior vice president of the medical device association AdvaMed, raised concerns that CE research might be used to support a “cheapest is best” approach. But Ignagni responded that “taking cost out of the equation is putting your head in the sand.”

These comments reflect concerns among medical product manufacturers that CE analysis could be manipulated to support a cost-cutting agenda, as opposed to promoting high-quality care. A key factor driving the CE debate is the emergence of new biotech therapies and medical diagnostics with the potential to improve public health and save lives, but at fairly high prices.

Pharmaceutical companies acknowledge that objective CE research could increase safe drug use and prevent safety problems that arise from inappropriate drug use. At the same time, industry leaders maintain that payors should cover all medications that FDA deems to be safe and effective and disregard costs in effectiveness calculations. Additional research requirements for sponsors, moreover, could be costly: prospective studies cost hundreds of millions of dollars and are vastly different from relatively low-cost retrospective data reviews. A white paper issued by the Biotechnology Industry Organization (BIO) last year questioned whether CE research methods are sufficiently developed to deal with the complexities of biotech therapies and the wide variations in individual response.

Despite these disputes, healthcare experts and pharmacoeconomic analysts are making progress in addressing operational and organizational policies for a CE research entity. Key issues are who will control and pay for the program, who will set the research agenda, which treatments will be evaluated, and how closely analysts will link CE research to payment policy. All parties see a need to clarify methodology and standards for CE research, which many in the field consider more an art than a science. There are important differences in how economists value “quality-of-life years” and other standard values used in CE research. The International Society for Pharmacoeconomics & Outcomes Research (ISPOR) has been addressing these and related topics at conferences and through journal publications, and CE research is the topic of discussion at numerous academic and industry meetings. The National Pharmaceutical Council (NPC) has shifted focus to play a role in the debate on how best to conduct and use evidence-based analysis in making drug coverage decisions.