Comparative effectiveness won't just retreat into the background.
The WSJ Health blog reports that two more researchers, Steven Pearson - president of the Insitute for Clinical and Economic Review and Peter Bach - an associate attending physician at Memorial Sloan-Kettering Cancer Center, are the latest to suggest Medicare should pay more for therapies that actually work. Hmmm. Novel thought. They term this a "dynamic pricing" model. Sounds like comparative effectiveness to me.
Under their plan, a new therapy would be priced under existing formulas. After three years, with data in hand as to the benefit or lack thereof, the therapy could be repriced. Under current policy, Medicare covers therapies that meet a "reasonable and necessary" standard plus a profit margin. These authors suggest once a "reasonable and necessary" finding is reached that Medicare should also look at comparative effectiveness in setting the reimbursement rate.
They argue that for new treatments - companies and clinicians will now have greater incentive to generate appropriate data supporting the fac that their treatment actually works better than an existing one - in order to justify a reimbursement premium.
“A shift in Medicare’s fundamental approach to coverage and reimbursement decisions would require new legislative authorities and would be highly contested by those with a vested interest in existing reimbursement systems,” the authors write. The difficulty of changing legislative, regulatory and political processes “is hard to overstate,” they write.
Clearly, no change of this magnitude will come easy. However, economic reality is that more and more treatments need to pass an effectiveness test. There should be a requirement to show a medical or patient benefit in order to justify a pricing premium and to expect government or third party reimbursement. Pricing can't be based solely on what it takes to earn a return on investment for the manufacturer - that's fine if there is also a measurable benefit - and its well past time that we start measuring.
Posted by Bruce Lehr October 6th 2010.