Transcript Understanding Americans and Cost-Effectiveness Analysis (“Mama

Beating Around the Bush:
Why Americans Don’t Use CostEffectiveness Analysis (or do they?)
Peter J. Neumann
Tufts-New England Medical Center,
Boston, MA
Overview
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Some historical context
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Understanding the current political climate
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Why don’t Americans use CEA (or do they)?
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Looking ahead
Health insurance cover in US, 2005
Uninsured
13%
Military Health
Insurance
3%
Direct
Purchase
8%
Medicaid
10%
Employer
54%
Medicare
12%
Source: Health Care Coverage in America: Understanding the issues and proposed solutions.
www.CoverTheUninsured.org/Materials
Medicare expenditures and
income as % of U.S. GDP
Source: 2006 Annual Report of the Medicare Boards of Trustees
A Variation Problem
Dartmouth Atlas of Healthcare
A bit of history …
A big country
We’re not Canada!
Understanding the current
political climate

“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
Why Don’t Americans Use CostEffectiveness Analysis?
Why don’t Americans
use CEA?
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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
CEA in America: Key players
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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
Medicare
Selected cost-effectiveness ratios for
technologies covered by Medicare
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Left-ventricular assist devices: $500,000-$1.4
million/QALY
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Lung-volume reduction surgery: $98,000$330,000/QALY
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Implantable cardioverter defibrillators: $30,000$85,000/QALY
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PET for Alzheimer’s disease: Over $500,000/QALY
Source: Matchar, 2003; Gillick, 2004
Cost Effectiveness and Use of Selected
Interventions in the Medicare Population
Health Intervention
Cost Effectiveness (2002$ /
QALY)
% Implementation in
Medicare
Influenza vaccine
Cost saving
40-70%
Beta blocker after MI
Under $10,000 / QALY
85%
Cholesterol management,
secondary prevention
$10,000 to $50,000 / QALY
30%
Dialysis for ESRD
$50,000 to $100,000 / QALY
90%
Lung-vol reduction surgery
$100,000 to $300,000 / QALY
5,000 to 100,000 cases per year*
Left ventric assist devices
Over $500,000 / QALY
5,000 to 100,000 cases per year*
PET for Alzheimer’s disease
Over $500,000 / QALY
50,000 cases per year*
* projection
Source: Gillick, 2004; Neumann, 2005; www.hsph.harvard.edu/cearegistry.
The Medicare Modernization Act
“I don’t make jokes. I just watch the
government and report the facts”
– Will Rogers
MMA (1)
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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
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)
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“Every formulary must include
drugs within each therapeutic
category and class, though not
necessarily all drugs within such
categories and class.”
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
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Medicaid
John Kitzhaber
States Participating in DERP, 2006
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Alaska
Arkansas
California
Idaho
Kansas
Michigan
Minnesota
Missouri
Montana
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Source: Center for Evidence-Based Policy, OHSU
New York
North Carolina
Oregon
Washington
Wisconsin
Wyoming
CHCF/CALPERS
AMCP Format
MCOs and PBMs That Have
Adopted AMCP’s Format
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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
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Anthem Rx Mgmt
Argus
Coventry
Prime Therapeutics
M Plan
Mayo Health Plan
Caremark
MedImpact
ACS State Healthcare
VA and DOD
Kaiser Permanente
Audit of 106 economic analyses 2002-2005
Total AMCP Dossiers submitted in 2002-2005
Dossiers including economic information
Total number of distinct health economic analyses
among the 52 AMCP dossiers containing economic
information
*(dossiers may contain one or more analyses)
115
52
(45%)
106*
Audit of 106 analyses, detail by year
Year
# of AMCP
dossiers
reviewed
# of AMCP
dossiers
w/economic
information
# of economic
analyses
reviewed
2002
38
15
26
2003
31
20
41
2004
34
13
43
2005
12
4
5
Total
115
52
106
General Description 1
Total # of
Observations
% Positive
result (n)
Statement on form of economic analysis
(even if wrong)
106
59% (62)
Discussion about form of economic analysis
chosen
106
11% (12)
Form of analysis chosen is a CMA or a ‘costs
study’
106
48% (51)
Discussion about analysis and parameters
selected
106
17% (18)
Statement of viewpoint of analysis
106
38% (40)
Characteristics
General Description 2
Total # of
Obs.
% Positive
result (n)
Analysis perspective is 3rd party payer’s
106
89% (91)
Time horizon for costs and benefits stated
106
78% (83)
Time horizon is 2 years or more
106
42% (44)
44
34% (15)
106
20% (21)
Characteristics
Discounting if analysis 2 years or longer
All assumptions are clearly stated
General Description 3
Total # of
Obs.
% Positive
results (n)
Report of productivity changes
106
13% (14)
Statement of rationale behind choice
of comparators
Compared product to all relevant
comparators
106
41% (43)
106
37% (39)
Characteristics
General Description 4
Total # of
Obs.
% Positive
results (n)
Reports quantity of resources separately from
prices
106
21% (22)
Reports sensitivity analysis performed
106
43% (46)
Incremental results reported (even if wrong
formulas)
106
26% (28)
All conclusions follow from data reported
106
54% (57)
Conclusions accompanied by specific caveats
106
18% (19)
Report mentions that comparators might be
superior given changes in assumptions
106
8% (8)
Characteristics
CEA in America: The Critical
Importance of Value Assessment
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Medicare
Medicaid (The DERP)
FDA
Other public payers (VA, DoD)
The public health establishment (CDC, NiH,
AHRQ, OMB etc.)
Private health plans
Employers
Consumers
Looking ahead
Prospects for CEA
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
The view from politicians …
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“I’m so miserable without you, it’s like
having you here.”
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“I don’t know whether to kill myself or go
bowling”
7 trends to watch
1. Growing use of value evidence to inform:
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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?