Comparing Comparative Effectiveness

As health care reform legislation works its way through the U.S. Congress, it is becoming increasingly likely that some form of comparative effectiveness will be part of the package. As medical reimbursement expert Gerald Rogan pointed out in his talk at the 2009 Neurotech Leaders Forum last month [see Conference Report, p6], neurotechnology vendors should prepare themselves early on for an analysis of how their therapies stack up against available alternative therapies both in terms of clinical effectiveness and cost effectiveness.

Depending on how the legislation is crafted, there are several potential traps for neurotech device manufacturers. For example, a manufacturer of an implanted neuromodulation device costing $25,000 plus another $25,000 for the surgery is at an immediate disadvantage against a pharmaceutical manufacturer whose drugs cost $5 per pill. Clearly any type of cost effectiveness analysis would not only have to consider the appropriate time horizon to equilibrate total costs to the payer, but also the inherent cost of medical refractoriness. In other words, if—as is the case with depression—it takes several years and several failed drug responses to determine if a patient is treatment-resistant, the expected total cost of all failed therapies should be taken into account.

More insidious is the possibility that comparative effectiveness may fail to consider the fact that device interventions, by their very nature, achieve better overall and economic effectiveness in their second and third generations, for many of the same reasons that today’s cell phones and laptop computers are far more cost-effective than those of 1990. If comparative effectiveness analysis were to block implementation of new first-generation devices, these second- and third-generation devices might never see the light of day.

Another worry cited by one attendee at the Neurotech Leaders Forum is that the required test would have so many arms and require so many positive trials as to present an insurmountable barrier to manufacturers.

Still, there are scenarios where comparative effectiveness could work to the advantage of the industry and the nation’s healthcare. If the government were to allow or even finance joint clinical trials where several drug and device manufacturers could pool enrollees and act as each others’ controls, it could lower the cost of entry for new medical products and companies, while combining FDA trials with comparative effectiveness studies. And the government could make participation in comparative effectiveness studies optional with a very powerful incentive for manufacturers: any new product that emerges from the study as viable is guaranteed a national coverage decision by CMS.

Comparative effectiveness, if done right, could be a positive development for the industry. If it’s not done right, it could be severely damaging both to innovation and to healthcare.

James Cavuoto
Editor and Publisher