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Medicare use of healthcare cost-effectiveness analysis would ‘open floodgates’ in U.S. – ISPOR

by Thomas Meek at ISPOR
LONDON, Nov 10 (APM) - The “floodgates” to greater uptake of cost-effectiveness evaluation of drugs in the U.S. would open if Medicare were to implement such a process, according to a leading academic.
Charles Phelps, former provost of the University of Rochester in the U.S. and an expert on health economics, told a conference that there could only be widespread use of cost-effectiveness analysis in the U.S.’s predominantly private healthcare setting if its federal health insurance programme were to get on the front foot.
“If Medicare were to go there, the private sector would happily follow… The floodgates would really open with that,” said Phelps, who was speaking on Wednesday at the ISPOR conference in Glasgow.

Limited current use

Overhauling the current system in the U.S., which currently provides little assessment of a drug’s value after it is approved by the Food and Drug Administration (FDA), poses a significant challenge, however, said Phelps.
He noted that previous efforts to create an organisation to provide some sort of cost-effectiveness analysis, such as the Office of Technology Assessment, have been abandoned, while the most recent effort to form a public body to compare the effectiveness of different treatments - the Patient-Centered Outcomes Research Institute (PCORI), as part of former president Barack Obama’s Affordable Care Act (ACA) - does not really take cost into account.
There is some limited current public sector use of cost-effectiveness analysis in the U.S., including the Advisory Committee on Immunization Practices (ACIP) discussion on vaccinations and by the Centers for Disease Control and Prevention’s community preventive services task force.

Fears of legal battles

As for what is holding the U.S. back in this area compared to other regions such as Europe, where there is widespread health technology assessment (HTA), Phelps said that one of the issues is the legal setting in the U.S.
“Healthcare providers and insurers fear legal battles if they withhold effective treatments with poor cost-effectiveness,” he said.
There are also implications of large “cutoff values” for products, with estimates in the U.S. putting a value of $400,000 per life-year - a big number in cost-effectiveness circles, according to Phelps.
The attitude of the U.S. public is also an issue. “Behind all this is fairly deep loathing in the U.S. for explicit rationing of healthcare.”
This was evident in the widespread - and unfounded - concern led by former Republican vice presidential candidate Sarah Palin that Obama’s ACA would introduce ‘death panels’, said Phelps, noting that polls suggested 30% of Americans believed this would be the case. This is despite the ACA only suggesting an offer to pay for one voluntary counselling service per year on end-of-life treatment.

Unwilling to give up existing treatments

Any move towards uptake of cost-effectiveness analysis needs to consider that people are willing to not pay for new treatments rather than give up existing therapies which are then deemed to not be cost-effective.
“The message for most politicians is 'don’t try to take away something people already have'. I think that’s part of the problem we have in the U.S.; we have everything now because there has never been a control on it before and trying to pull that back is going to be problematic.”

Potential drivers

As for other factors that could drive wider moves towards analysis of drug value, Phelps said the legal question has to be clarified so that insurance plans can limit coverage as long as this is made explicit and people understand the situation.
The U.S. could also alter tax laws to remove subsidies for employer-paid health insurance plans that encourage people to overinsure.
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