Comparative Effectiveness Research: Key Issues and Controversies Consumer-Purchaser Disclosure Project Discussion Forum May 5, 2009 Steven D. Pearson, MD, MSc, FRCP

Background Policy givens: Unsustainable cost increases Unexplainable variation in practice patterns Not enough evidence for decisions about new treatments International efforts (health technology assessment) NICE in England “Comparative Effectiveness” Stark bill Baucus bill American Recovery and Reinvestment Act (ARRA) stimulus bill funding for Comparative Effectiveness Research (CER) 2

10-Year Impact on Spending of a Center for Comparative Effectiveness Dollars in billions SAVINGS COSTS Source: Based on estimates by The Lewin Group for The Commonwealth Fund, 2007.

Chief remaining questions on CER Stimulus spending Priorities for spending at AHRQ and NIH Secretary of HHS $400 million Inclusion of cost and/or cost-effectiveness CER 2.0 Structure Governance Funding Priority Setting Research Methods (cost-effectiveness) Implementation 4

Stimulus spending Priorities for spending at AHRQ and NIH Mix of systematic reviews and prospective studies Framing of topics as “drug vs. drug” or broader pathways of care Studies of health plan policies such as prior authorization Secretary of HHS $400 million Inclusion of cost-effectiveness 5

Weighing up costs and effects High extra cost Low gain Cost ($) New treatment less effective, more costly Low extra cost High gain Using the concept of incremental costs and incremental effects we define the cost-effectiveness plane. We use this to illustrate the relative cost and effect of an intervention compared to some control. If the intervention lies in the south-east quadrant, it is both less expensive and more effective than the control, and so will be preferred. In the north-west quadrant, an intervention is more expensive and less effective, and so the control will be preferred. In the other two quadrants there is a trade-off between cost and effectiveness. The ICER is illustrated by the slope of a line through the origin and the IE/IC point for an intervention. Effectiveness New treatment more effective, less costly

Why Costs? “Not to consider costs is delusional” Costs should be considered transparently and always in the context of clinical effectiveness Without consideration of cost No societal support for explicit cost considerations in clinical decisions and medical policies All explicit health plan efforts will be suspect Continued difficulty negotiating prices in relation to evidence of incremental benefit Marginal benefit at high price will continue to be a dominant market signal for manufacturers

How to do Costs? Carve-out Arms’ length Carve-in Commissioned by individual payers, including Medicare Arms’ length Funded as part of CER stream but function delegated to an allied yet separate organization Carve-in Distrust of clinical effectiveness judgments if mixed with costs More efficient to nest within same effort to generate a systematic review of the clinical evidence Benefits from the objectivity and transparency of a federal comparative effectiveness initiative to gain broad acceptance

Legislation for CER 2.0 Structure Governance Funding Priority Setting Inside or attached to government vs. independent? Governance Stakeholders on the Governing Board or only on Advisory Committees? Funding How much from private health plans and purchasers? Priority Setting Who and how? Research Methods Cost-effectiveness yea or nea? Implementation

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How will CE information be used? Concerns Limit access to life-saving treatments just because of cost “One-size-fits-all” methodologies and applications to coverage policies Cost-effectiveness applied as a strict cut-off for coverage Cost-effectiveness devalues older, sicker patients Put governmental bureaucrats between you and your doctor Stifle innovation Assume that even when comparative effectiveness research means new head-to-head or other trials, ultimately the information will have to be assessed and put in context with other information for decision-makers. How will that information be used? 11

How CER should be used “Too cold” “Too hot” “Just right” Dissemination of information to patients and clinicians “Too hot” Direct mandates for “all-or-nothing” coverage decisions “Just right” Providing “guidance” to patients, clinicians, and payers Application by payers to create value-based tools and policies in support of optimal care and to ensure best use of every health care dollar Patient-clinician decision support Reimbursement policy Value-based insurance design Physician group compensation (P4P) Assume that even when comparative effectiveness research means new head-to-head or other trials, ultimately the information will have to be assessed and put in context with other information for decision-makers. How will that information be used? 12

Application of Cost-effectiveness Help identify the least costly alternative among equivalent treatment options Provide some context for the additional cost paid for very marginal clinical benefits Help anchor initial pricing for new technologies in evidence of their marginal (if any) benefit Tools Patient-clinician decision tools Reimbursement policy Value-based insurance design Physician group compensation (P4P) to align incentives Assume that even when comparative effectiveness research means new head-to-head or other trials, ultimately the information will have to be assessed and put in context with other information for decision-makers. How will that information be used? 13

For further information: spearson@icer-review.org www.icer-review.org