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The Pragmatist's Guide to Comparative Effectiveness Research

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  • Amitabh Chandra
  • Anupam B. Jena
  • Jonathan S. Skinner

Abstract

Following an acrimonious healthcare reform debate involving charges of "death panels," in 2010, Congress explicitly forbade the use of cost-effectiveness analysis in government programs of the Patient Protection and Affordable Care Act. In this context, comparative effectiveness research emerged as an alternative strategy to understand better what works in health care. Put simply, comparative effectiveness research compares the efficacy of two or more diagnostic tests, treatments, or health care delivery methods without any explicit consideration of costs . To economists, the omission of costs from an assessment might seem nonsensical, but we argue that comparative effectiveness research still holds promise. First, it sidesteps one problem facing cost-effectiveness analysis—the widespread political resistance to the idea of using prices in health care. Second, there is little or no evidence on comparative effectiveness for a vast array of treatments: for example, we don't know whether proton-beam therapy, a very expensive treatment for prostate cancer (which requires building a cyclotron and a facility the size of a football field) offers any advantage over conventional approaches. Most drug studies compare new drugs to placebos, rather than "head-to-head" with other drugs on the market, leaving a vacuum as to which drug works best. Finally, the comparative effectiveness research can prove a useful first step even in the absence of cost information if it provides key estimates of treatment effects. After all, such effects are typically expensive to determine and require years or even decades of data. Costs are much easier to measure, and can be appended at a later date as financial Armageddon draws closer.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.25.2.27
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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 25 (2011)
Issue (Month): 2 (Spring)
Pages: 27-46

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Handle: RePEc:aea:jecper:v:25:y:2011:i:2:p:27-46

Note: DOI: 10.1257/jep.25.2.27
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References

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  1. Amitabh Chandra & Douglas O. Staiger, 2007. "Productivity Spillovers in Health Care: Evidence from the Treatment of Heart Attacks," Journal of Political Economy, University of Chicago Press, vol. 115, pages 103-140.
  2. Douglas Almond & Joseph J. Doyle, Jr. & Amanda E. Kowalski & Heidi Williams, 2010. "Estimating Marginal Returns to Medical Care: Evidence from At-Risk Newborns," The Quarterly Journal of Economics, MIT Press, vol. 125(2), pages 591-634, May.
  3. Anupam Jena & Tomas Philipson, 2009. "Endogenous Cost-Effectiveness Analysis in Health Care Technology Adoption," NBER Working Papers 15032, National Bureau of Economic Research, Inc.
  4. David Meltzer, 1997. "Accounting for Future Costs in Medical Cost-Effectiveness Analysis," NBER Working Papers 5946, National Bureau of Economic Research, Inc.
  5. Nord, Erik & Richardson, Jeff & Street, Andrew & Kuhse, Helga & Singer, Peter, 1995. "Who cares about cost? Does economic analysis impose or reflect social values?," Health Policy, Elsevier, vol. 34(2), pages 79-94, November.
  6. Garber, Alan M. & Phelps, Charles E., 1997. "Economic foundations of cost-effectiveness analysis," Journal of Health Economics, Elsevier, vol. 16(1), pages 1-31, February.
  7. Basu, Anirban & Jena, Anupam B. & Philipson, Tomas J., 2011. "The impact of comparative effectiveness research on health and health care spending," Journal of Health Economics, Elsevier, vol. 30(4), pages 695-706, July.
  8. DiMasi, Joseph A. & Hansen, Ronald W. & Grabowski, Henry G., 2003. "The price of innovation: new estimates of drug development costs," Journal of Health Economics, Elsevier, vol. 22(2), pages 151-185, March.
  9. Katherine Baicker & Jonathan S. Skinner, 2011. "Health Care Spending Growth and the Future of U.S. Tax Rates," NBER Working Papers 16772, National Bureau of Economic Research, Inc.
  10. Meltzer, David, 1997. "Accounting for future costs in medical cost-effectiveness analysis," Journal of Health Economics, Elsevier, vol. 16(1), pages 33-64, February.
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Cited by:
  1. Amitabh Chandra & Jonathan S. Skinner, 2011. "Technology Growth and Expenditure Growth in Health Care," NBER Working Papers 16953, National Bureau of Economic Research, Inc.
  2. repec:exc:wpaper:2013-09 is not listed on IDEAS
  3. David H. Howard & Yu-Chu Shen, 2011. "Comparative Effectiveness Research, COURAGE, and Technological Abandonment," NBER Working Papers 17371, National Bureau of Economic Research, Inc.

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