Compare and Decide

Political and policy leaders in the U.S. see a new system of “comparative effectiveness reviews” as a solution to many of our problems in the health sector.

This is coming, so we need to pay attention. We invited a leading European authority to conduct a seminar yesterday for our colleagues in the policy community to give us an overview.

The idea is that a government-commissioned entity would “compare” various medical and pharmaceutical treatments to determine which are “effective” and make “recommendations” for care.

The belief is that this agency would bring science and economics to bear to decide what works and what doesn’t — and no doubt what is most cost effective. Doctors and hospitals would be directed to follow the recommendations, and their reimbursement — and risk of lawsuits — likely would depend on compliance.

This isn’t a new idea, but one that is being tested in Europe. So how is it working out?

Professor Michael Schlander of Wiesbaden, Germany, who is a licensed physician, an experienced pharmaceutical researcher and executive, and a Ph.D. economist, has written extensively about comparative effectiveness appraisals. His latest book, Health Technology Assessments by the National Institute for Health and Clinical Excellence, offers a comprehensive analysis of the process by which NICE — as the review body in the U.K. is called — evaluated treatments for attention deficit hyperactivity disorder.

A few of the many conclusions from his talk:


  • This is not a device that can be used to drive down costs. NICE decisions have led to higher spending on pharmaceuticals, not reductions, boosting spending by 1% a year.


  • The process slows adoption of new medicines and treatments. The health sector becomes more rigid and less open to innovation in the process.


  • It is almost impossible to integrate clinical and economic findings because they use different methods of evaluation. As a result, many subjective decisions are made in what is believed to be an objective scientific process. One of these “assumptions” is the value of a year of your life (should it be $50,000, $100,000?).


  • Individual differences in responses to drugs and treatments are shoved aside, especially disadvantaging patients who do not respond well to standard care.

How is the general public responding to NICE restrictions? Not well. There has been considerable backlash to a recent decision by NICE to deny payment for four new kidney cancer drugs, even though they had been shown to extend patients’ lives.

And a news release out this week from the National Osteoporosis Society in Britain says NICE is “deeply flawed” and calls its guidance “inflexible and unethical.”

“Patients will have to get considerably worse, with their bone density dropping to a dangerously low level before they are eligible for alternative treatment,” the society said in a news release. This is “not only bad for patients, but also puts doctors in an impossible position.” They are calling for NICE to throw out its recommendations and start over.

And a new study from the Institut économique Molinari in France says that approval processes in Europe are increasingly “tough, heavy-handed and costly…Despite the best intentions, the inevitable consequence of these regulations is to push up the cost of innovation substantially, to undervalue its benefits and to reduce the number of new products by making certain projects unprofitable.”

The bottom line is this seemingly innocuous and utopian “comparative effectiveness review” process carries great risks to access to medical care and to the continuing process of innovation. It means having officials decide what our lives are worth and which medical care is worth the cost.

Is this even remotely something we want?

And experience in Europe says it won’t save the system money, but will likely increase spending!

We are certainly in favor of new processes that help the medical profession learn from the successes and failures of clinical interventions. But centralized decisions are not the answer. This is a problem that is best solved by having a multiplicity of studies, not a single government body that must determine what our lives are worth.

First, do no harm.



One of the questions that voters will be faced with on Tuesday is whether they believe that government or individuals will do a better job of making decisions about their health care.

You decide.

Grace-Marie Turner

Recent News Articles and Studies

Obama's Plan to End Private Health Insurance
Jagged Little Pills
Hawaii's Hard Health-Care Lesson
Alive and Working: How Access to New Drugs has Slowed the Growth in America's Disability Rates
FDA Preemption and Patient Welfare in Wyeth v. Levine
For a Little More, the Doctor Will See You Now
Stopping Dr. Statism
Almost Everyone Would Do Better Under the McCain Health Plan


Obama's Plan to End Private Health Insurance
Grace-Marie Turner, Galen Institute
The American, 10/31/08

Sen. Barack Obama's health care plan would lead to the deterioration of the private health insurance market, with the federal government — read: taxpayers — covering an increasingly large share of the U.S. population, writes Turner. The centerpiece of the Obama plan may not seem revolutionary at first: He wants to establish a new public health insurance program that would be offered alongside private insurance. However, the federal government would have the ability to drive up the costs of private health insurance while keeping premiums for its own insurance program artificially cheap. Slowly but surely, private insurers would be supplanted by the public program. Obama should level with the voters and tell them that his plan would eliminate private insurance and put millions more people in this new government program.

Jagged Little Pills
Grace-Marie Turner, Galen Institute
The American Spectator, 10/28/08

The United States currently bans bulk prescription drug imports, but if that ban were lifted, millions of unsuspecting patients could find themselves with dangerous counterf
eit drugs
in their medicine cabinets, writes Turner. Belgian officials recently seized more than two million fake painkillers and anti-malarial pills being shipped to Africa from India. The World Health Organization estimates that 10% of today's global medicine supply is counterfeit. The events in Belgium should give pause to American lawmakers pushing to legalize foreign drug importation. If bulk imports were allowed, these drugs could easily have made their way to the U.S. market.

Hawaii's Hard Health-Care Lesson
Grace-Marie Turner, Galen Institute
New York Post, 10/27/08

Hawaii just had a vivid lesson in health care economics, learning that if you offer people insurance for free — surprise, surprise — they'll quickly drop other coverage to enroll, writes Turner. As a result, Hawaii is ending the only state universal child health care program in the country after just seven months. State officials found that families were dropping private coverage to enroll their children into the public plan. In fact, 85% of the children in Keiki Care previously had been covered under a private, nonprofit plan that costs $55 a month. All this is a lesson for political leaders in Washington who are drafting plans now to expand SCHIP to children in families earning up to $82,000 a year or more. That expansion would wind up doing what Keiki Care did: mainly crowd out the private coverage that millions of middle-income kids already have.

A better alternative would be to provide the resources for uninsured families to get coverage, ideally through refundable tax credits or premium support for private coverage, including policies that may be available to parents at work, writes Turner in National Journal's blog on incremental reform.


Alive and Working: How Access to New Drugs has Slowed the Growth in America's Disability Rates
Frank R. Lichtenberg, Columbia University and National Bureau of Economic Research
Manhattan Institute, 10/08

The use of newer prescription drugs has helped reduce the growth in U.S. disability rates, according to a new report from Columbia University professor Frank Lichtenberg. He used Medicaid prescription data from 1995-2004 and determined the average vintage (i.e., how recently the drug's active ingredients were approved by the FDA) of the drugs on the states’ Medicaid formularies. He found that drug vintage was a significant factor in determining the size of a state’s disability rolls. The older the vintage, the higher the number of people on the state’s disability rolls and vice versa. California and Connecticut had the newest vintages and were among the states with the lowest increase in disability rolls; Oklahoma, Texas, and West Virginia had the oldest drugs and among the highest disability rates. Dr. Lichtenberg concludes that access to newer drugs will keep more Americans off disability rolls and allow them to remain active as wage earners and taxpayers.

FDA Preemption and Patient Welfare in Wyeth v. Levine
John E. Calfee
American Enterprise Institute, 10/30/08

The U.S. Supreme Court will hear a case on Monday that will determine whether a pharmaceutical firm that fully complies with FDA regulations, including the provision of safety information, can be sued in state courts for failure to fully warn about side effects, safety, and other concerns. The issue is whether juries can override the Food and Drug Administration by deciding that a warning label didn’t adequately protect consumers, essentially invalidating the FDA’s safety and approval process. Calfee concludes that patients will be better off if the federal process is upheld by the Supreme Court, but the path to that conclusion lies in the facts of the case itself, in the nature of the liability system, and especially in certain features of the FDA.


For a Little More, the Doctor Will See You Now
Tyeesha Dixon and Kelly Brewington
The Baltimore Sun, 10/26/08

Concierge care appears to be sweeping across Maryland as primary care doctors feel the financial crush of rising costs and low insurance reimbursement rates, reports The Baltimore Sun. Physicians practicing concierge care move away from the insurance-dependent model and instead charge a flat yearly fee in exchange for the promise of 24-hour access, unhurried appointments, home and hospital visits, and state-of-the-art annual physicals. Physicians say the model allows them to trim their patient loads and give patients quality care without worrying whether insurance will cover it. MDVIP, a Florida-based company formed nine years ago that has become a leader in organizing boutique practices, says it has 260 doctors in 24 states and Washington, D.C., serving roughly 90,000 patients. Patients in MDVIP practices pay $1,500 a year and receive a wellness plan, a wallet-sized CD of their medical history and an hour-long physical with EKG and lab tests.


Stopping Dr. Statism
George F. Will
The Washington Post, 10/26/08

On Election Day, Arizonans can give the nation the gift of a good example, writes columnist George Will. They can enact a measure that could shape the health care debate and arrest or accelerate the nation's slide into statism. Proposition 101, the Freedom of Choice in Health Care Act, would prevent employer or individual insurance mandates of the sort imposed in Massachusetts. Proposition 101 would protect Arizonans not only against abridgements of their liberties by their state government but also against comparable actions by the federal government. If Arizonans pass Proposition 101, residents of other states will have a template for resistance to contemporary liberalism's next lunge toward its unvarying goal — enlargement of government supervision of our lives, Will concludes.


Almost Everyone Would Do Better Under the McCain Health Plan
Robert Carroll
The Wall Street Journal, 10/27/08

The McCain health care insurance tax credit may well be one of the most misunderstood proposals of this presidential election, but it is highly progressive and will provide a powerful incentive for people to purchase health insurance, writes Carroll. Because the cr
edit is for a fixed amount, regardless of how much you spend on health care, it helps break the link between the existing tax subsidy and how much is spent on health care. The article includes a chart showing that the McCain tax credit for the purchase of health insurance exceeds the value of the current exclusion across all income levels. Indeed, it generally provides more resources to purchase health insurance than the existing exclusion.

Steve Entin and Michael Schuyler describe the candidates' tax proposals in a new paper for the Institute for Research on the Economics of Taxation.

Upcoming Events

Health Care at a Crossroads: What Lies Ahead
The Heritage Foundation Event
Monday, November 3, 2008, 6:00 p.m. – 8:30 p.m.
Minneapolis, MN
Grace-Marie will participate in a panel discussion about the future of health care reform.

Grace-Marie Turner speaking on the News Scene show
WCRX-FM Radio Broadcast
Tuesday, November 4, 2008, 7:15 p.m.
Chicago, IL

If You Build it, Will They Come? The Impact of Health Care on the Economy
Oregon Health Forum Event
Friday, November 7, 2008, 11:30 a.m. – 1:30 p.m.
Eugene, OR

Massachusetts Health Reform: A Giant Step Toward Universal Coverage?
Alliance for Health Reform Event
Friday, November 7, 2008, 12:15 p.m. – 2:00 p.m.
Washington, DC

Runaway Medicaid Spending: A Threat to Health Care for the Poor?
American Enterprise Institute Event
Friday, November 7, 2008, 12:30 p.m. – 2:30 p.m.
Washington, DC

13th Annual Conference
National Business Coalition on Health Event
November 9-11, 2008
Washington, DC
Grace-Marie will speak about "The Future of Health Care Policy" on Tuesday, November 11.

The Price Of Medical Technology: Are We Getting What We Pay For?
Health Affairs Briefing
Monday, November 10, 2008, 9:30 a.m. – 11:30 a.m.
Washington, DC

Your Candidates — Your Health 2008 Post-Election Meeting
Research!America Event
Tuesday, November 11, 2008, 10:30 a.m. – 12:00 p.m.
Washington, DC

Getting Ready for the New Administration and Congress
Council for Affordable Health Insurance and Heartland Institute Workshop
Wednesday, November 12, 2008, 2:00 p.m. – 6:00 p.m.
Washington, DC

Health Care Under the New Administration
Citizens’ Council on Health Care Event
Thursday, November 13, 2008, 8:00 a.m. – 12:00 p.m.
Minneapolis, MN

The Winds of Change: National Election Results 2008
Employers Council on Flexible Compensation Forum
November 13-14, 2008
Orlando, FL
Grace-Marie will discuss how the November election results may impact businesses on Thursday, November 13.


Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features a commentary by Grace-Marie Turner on the major developments and issues of the week as well as summaries of writings by participants in the Health Policy Consensus Group and other articles of interest from the health policy world, plus announcements of coming events. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about the newsletter and our organization, please visit our website at

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The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.