Putting a Dollar Sign on Patients' Lives

Published in the San Diego Union-Tribune, December 22, 2008

While Americans convincingly voted for change on Election Day, not all the change that President-elect Obama has promised on health care is for the better.

Specifically, Obama wants to have the federal government establish a research program to compare different medical treatments and pharmaceuticals, deciding which are worthwhile and cost-effective. But there is mounting evidence from Europe, where these “comparative effectiveness” programs are widely used, that they are not the silver bullet he's promised.

The belief is that this agency would bring science and economics to bear to decide what works and what doesn't. The theory is that by analyzing available medical research and studies, the agency could offer guidance to physicians and patients as they make treatment decisions, and health care payers would have an opportunity to evaluate treatments based on their cost-effectiveness.

Professor Michael Schlander, a well-respected German physician, medical researcher and economist, has spent years studying comparative effectiveness systems in Europe – and warns that it is far from a glide path to saving money and improving the quality of care that many political leaders believe.

While we all can agree that having more and better information can lead to higher-quality medical care, the problem lies in the cost-effectiveness part of the equation.

A system conceived to compile information about the relative effectiveness of medical treatments can be very quickly used as a tool to reward doctors who follow recommendations and punish those who don't. Doctors and hospitals would be directed to follow the recommendations, and their reimbursement – and risk of lawsuits – likely would depend on compliance. Comparative effectiveness boards, not doctors, would be making decisions about which treatments would be available, and the system would become more and more rigid as doctors fear going against the rules.

Schlander has studied Great Britain's comparative effectiveness agency, known as the National Institute for Health and Clinical Excellence, or NICE. He points out that NICE weighs medical results against costs to determine the comparative value of different medical treatments. But while it is simple to say how much a drug costs, it's much more difficult to place a monetary value on the months or years that a drug can add to a patient's life.

Reducing human beings and their pain and suffering to dollars and cents to plug into a formula is troublesome work. Proponents argue that faced with limited resources, health plans need some way of making decisions about what treatments are worth paying for.

But try telling that to the families of thousands of Alzheimer's patients in the U.K. who lost access to a promising medicine when NICE decided it was too expensive. Or the kidney cancer patients who lost access to groundbreaking new drugs when NICE decided the benefit (an average of six more months of life) did not exceed the costs (roughly $50,000 per patient per year).

Another misconception about comparative effectiveness is that it keeps medical costs in check. Schlander found NICE decisions alone actually led to higher spending on pharmaceuticals, driving up spending by an additional 1 percent a year.

It is also evident that comparative effectiveness limits choices and stifles innovation.

For starters, comparative effectiveness essentially replaces the experience, wisdom and knowledge of physicians with a large, faceless bureaucracy that reduces everything to formulas. In the name of protecting their bottom lines, public and private health care plans would likely refuse to cover certain treatments if it didn't have the approval of this centralized agency.

Physicians and hospitals, fearing lawsuits, would also be much less likely to try treatments not yet analyzed and approved by comparative effectiveness – even if early evidence suggests it might work for a particular ailment or set of patients. Bureaucracy replaces innovation.

And pharmaceutical companies would be less likely to pursue new and potentially life-saving drugs if they fear the drug will not get a positive grade. Ultimately, funds for new research would dry up.

There is no doubt our health care system is in need of reform. And Obama's victory shows that Americans are ready for a new approach. But it's unlikely that a one-size-fits-all approach to medicine – where the lives of human beings are reduced to numbers on a graph – is what anyone has in mind. Comparative effectiveness can be a valuable tool for physicians and patients, but applied incorrectly, it becomes dystopian in a heartbeat.

Turner is president of the Alexandria, Va.-based Galen Institute, a nonprofit research organization focusing on free-market solutions to health reform. She can be reached via turner@galen.org .

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Published in the San Diego Union-Tribune, December 22, 2008

While Americans convincingly voted for change on Election Day, not all the change that President-elect Obama has promised on health care is for the better.

Specifically, Obama wants to have the federal government establish a research program to compare different medical treatments and pharmaceuticals, deciding which are worthwhile and cost-effective. But there is mounting evidence from Europe, where these “comparative effectiveness” programs are widely used, that they are not the silver bullet he's promised.

The belief is that this agency would bring science and economics to bear to decide what works and what doesn't. The theory is that by analyzing available medical research and studies, the agency could offer guidance to physicians and patients as they make treatment decisions, and health care payers would have an opportunity to evaluate treatments based on their cost-effectiveness.

Professor Michael Schlander, a well-respected German physician, medical researcher and economist, has spent years studying comparative effectiveness systems in Europe – and warns that it is far from a glide path to saving money and improving the quality of care that many political leaders believe.

While we all can agree that having more and better information can lead to higher-quality medical care, the problem lies in the cost-effectiveness part of the equation.

A system conceived to compile information about the relative effectiveness of medical treatments can be very quickly used as a tool to reward doctors who follow recommendations and punish those who don't. Doctors and hospitals would be directed to follow the recommendations, and their reimbursement – and risk of lawsuits – likely would depend on compliance. Comparative effectiveness boards, not doctors, would be making decisions about which treatments would be available, and the system would become more and more rigid as doctors fear going against the rules.

Schlander has studied Great Britain's comparative effectiveness agency, known as the National Institute for Health and Clinical Excellence, or NICE. He points out that NICE weighs medical results against costs to determine the comparative value of different medical treatments. But while it is simple to say how much a drug costs, it's much more difficult to place a monetary value on the months or years that a drug can add to a patient's life.

Reducing human beings and their pain and suffering to dollars and cents to plug into a formula is troublesome work. Proponents argue that faced with limited resources, health plans need some way of making decisions about what treatments are worth paying for.

But try telling that to the families of thousands of Alzheimer's patients in the U.K. who lost access to a promising medicine when NICE decided it was too expensive. Or the kidney cancer patients who lost access to groundbreaking new drugs when NICE decided the benefit (an average of six more months of life) did not exceed the costs (roughly $50,000 per patient per year).

Another misconception about comparative effectiveness is that it keeps medical costs in check. Schlander found NICE decisions alone actually led to higher spending on pharmaceuticals, driving up spending by an additional 1 percent a year.

It is also evident that comparative effectiveness limits choices and stifles innovation.

For starters, comparative effectiveness essentially replaces the experience, wisdom and knowledge of physicians with a large, faceless bureaucracy that reduces everything to formulas. In the name of protecting their bottom lines, public and private health care plans would likely refuse to cover certain treatments if it didn't have the approval of this centralized agency.

Physicians and hospitals, fearing lawsuits, would also be much less likely to try treatments not yet analyzed and approved by comparative effectiveness – even if early evidence suggests it might work for a particular ailment or set of patients. Bureaucracy replaces innovation.

And pharmaceutical companies would be less likely to pursue new and potentially life-saving drugs if they fear the drug will not get a positive grade. Ultimately, funds for new research would dry up.

There is no doubt our health care system is in need of reform. And Obama's victory shows that Americans are ready for a new approach. But it's unlikely that a one-size-fits-all approach to medicine – where the lives of human beings are reduced to numbers on a graph – is what anyone has in mind. Comparative effectiveness can be a valuable tool for physicians and patients, but applied incorrectly, it becomes dystopian in a heartbeat.

Turner is president of the Alexandria, Va.-based Galen Institute, a nonprofit research organization focusing on free-market solutions to health reform. She can be reached via turner@galen.org .

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About the author