Beating Around the Bush: Why Americans Don’t Use Cost-Effectiveness Analysis (or do they?)

1. Beating Around the Bush: Why Americans Don’t Use Cost-Effectiveness Analysis (or do they?) Peter J. Neumann Tufts-New England Medical Center, Boston, MA

2. Overview • Some historical context • Understanding the current political climate • Why don’t Americans use CEA (or do they)? • Looking ahead

3. Health insurance cover in US, 2005 Source: Health Care Coverage in America: Understanding the issues and proposed solutions. www.CoverTheUninsured.org/Materials

4. Medicare expenditures and income as % of U.S. GDP Source: 2006 Annual Report of the Medicare Boards of Trustees

5. A Variation Problem Dartmouth Atlas of Healthcare

8. A bit of history …

9. A big country

10. We’re not Canada!

15. Understanding the current political climate

17. “I just bought a car from a guy that stole my girl, but the car don’t run, so I figure we got an even deal” – Country Western song

18. Why Don’t Americans Use Cost-Effectiveness Analysis?

19. Why don’t Americans use CEA? • Mistrust of methods • Methods vary • Studies not relevant • Mistrust of motives • Legal and regulatory barriers • Systemic barriers • Distaste for (explicit) rationing • We ARE using CEA, just quietly

20. CEA in America: Key players • Medicare • Medicaid (The DERP) • Private plans (AMCP Format) • FDA • Other public payers (VA, DoD) • The public health establishment (CDC, NiH, AHRQ, OMB etc.) • Private health plans • Employers • Consumers

21. Medicare

22. Selected cost-effectiveness ratios for technologies covered by Medicare • Left-ventricular assist devices: $500,000-$1.4 million/QALY • Lung-volume reduction surgery: $98,000-$330,000/QALY • Implantable cardioverter defibrillators: $30,000-$85,000/QALY • PET for Alzheimer’s disease: Over $500,000/QALY Source: Matchar, 2003; Gillick, 2004

23. Cost Effectiveness and Use of Selected Interventions in the Medicare Population * projection Source: Gillick, 2004; Neumann, 2005; www.hsph.harvard.edu/cearegistry.

24. The Medicare Modernization Act “I don’t make jokes. I just watch the government and report the facts” – Will Rogers

25. MMA (1) • Rx drug coverage for 40+ million • $0-$250, patient pays 100% • $250-$2,250, patient pays 25% • $2251-$3,600, patient pays 100% • >$3,600, patient pays 5% • Subsidies for low-income elderly and employer • New coverage for prevention (initial physical exam, cardiovascular screen, diabetes screen) • Medicare prohibited from negotiating drug prices

26. MMA (2) Formulary rules • Formularies must have multiple products in each category • Patients can get non-formulary drug if MD deems necessary • USP sets therapeutic class and revises • Drug plans required to establish P&T comm. • P&T decision must reflect therapeutic advantages in terms of safety and efficacy • Formularies may use good practices (e.g., pharmacoeconomics, other tools)

27. “Every formulary must include drugs within each therapeutic category and class, though not necessarily all drugs within such categories and class.”

28. MMA (3) • Demonstration projects (includes CEA) • AWP reform (CMS monitoring) • AHRQ role in comparative-effectiveness research • $15 million • prohibited from using it to exclude drugs

29. Medicaid

30. John Kitzhaber

31. Alaska Arkansas California Idaho Kansas Michigan Minnesota Missouri Montana New York North Carolina Oregon Washington Wisconsin Wyoming CHCF/CALPERS States Participating in DERP, 2006 Source: Center for Evidence-Based Policy, OHSU

32. AMCP Format

33. The Regence Group Premera Blue Cross Providence Health Plan Group Health Cooperative BC/BS of Hawaii (HMSA) Blue Shield of California Wellpoint Cardinal Health Health Partners Prescription Solutions Intermountain Health Care Anthem Rx Mgmt Argus Coventry Prime Therapeutics M Plan Mayo Health Plan Caremark MedImpact ACS State Healthcare VA and DOD Kaiser Permanente MCOs and PBMs That Have Adopted AMCP’s Format

34. Audit of 106 economic analyses 2002-2005

35. Audit of 106 analyses, detail by year

36. General Description 1

37. General Description 2

38. General Description 3

39. General Description 4

40. CEA in America: The Critical Importance of Value Assessment • Medicare • Medicaid (The DERP) • FDA • Other public payers (VA, DoD) • The public health establishment (CDC, NiH, AHRQ, OMB etc.) • Private health plans • Employers • Consumers

41. Looking ahead

43. Prospects for CEA

44. The view from academia… “Cost-effectiveness analysis has had, at best, a troubled youth… but it will give way to a successful adulthood.” - Peter Ubel, U of Michigan

45. The view from politicians … • “I’m so miserable without you, it’s like having you here.” • “I don’t know whether to kill myself or go bowling”

46. 7 trends to watch 1. Growing use of value evidence to inform: • Coverage • Formulary management • Payment • Incentives 2. Expanded use of AMCP Format 3. More consumer-driven health care 4. Medicare reforms (tiptoeing around CEA) 5. DERP-ization of drug class reviews 6. Employers revolt/Unions give back 7. A new institute?