Comparative Clinical Effectiveness and Cost-Effectiveness Research: Background, History, and Overview

Comparative Clinical Effectiveness and
Cost-Effectiveness Research: Background,
History, and Overview
October 15, 2007
Gretchen A. Jacobson
Analyst in Health Care Financing
Domestic Social Policy Division



Comparative Clinical Effectiveness and
Cost-Effectiveness Research: Background,
History, and Overview
Summary
Comparative clinical effectiveness research has been discussed as a source of
information for health care decision makers that may aid them in reaching evidence-
based decisions. The premise that “what is newest is not always the best” is the core
of the rationale behind comparative effectiveness research. Diverse governmental
and non-governmental organizations have publicly expressed their support and
reservations about comparative effectiveness research. Many bills have beenth
introduced in the 110 Congress that support comparative effectiveness research,
including S. 3, H.R. 2184, H.R. 3162 (CHAMP Act), and the Healthy Americans Act
(S. 334 and H.R. 3163). Although publicly supported by many governmental and
non-governmental entities in the abstract, controversy about comparative clinical
effectiveness research lies in its practice and implementation.
Health technology assessment tools (e.g., comparative clinical effectiveness,
cost-effectiveness, and cost-benefit analysis) have been used for decades in the
United States. To determine whether and what type of research is needed, the scope
and scale of current comparative effectiveness research efforts must be understood.
This report summarizes research efforts that have been funded and conducted.
Both the Agency for Healthcare Research and Quality (AHRQ) and the National
Institutes of Health (NIH) provide extramural research funding for health technology
assessments. AHRQ’s ongoing health technology assessment program includes the
Centers for Education and Research on Therapeutics (CERTs), the Developing
Evidence to Inform Decisions about Effectiveness (DEcIDE) Program, Evidence-
based Practice Centers (EPCs), and the Research Initiative in Clinical Economics
(RICE). The Veterans Health Administration (VHA) and the Department of Defense
(DOD) also have centers that conduct health technology assessments to help the
agencies make formulary and pricing decisions. Health technology assessments by
AHRQ’s Medical Treatment Effectiveness Program (MEDTEP) and the
Congressional Office of Technology Assessment (OTA) were terminated in 1995.
Some organizations that have used these assessments include the Academy of
Managed Care Pharmacy (AMCP), Consumer Reports’ Best Buy Drugs project, the
DOD, for-profit firms (including consulting firms, private insurers, and
pharmaceutical manufacturers), the Centers for Medicare and Medicaid Services
(CMS), the Oregon Health Plan, and the VHA. Some other countries have given
comparative clinical effectiveness and cost-effectiveness more explicit roles in their
health care systems.
Proponents maintain that a new comparative clinical effectiveness research
entity in the United States could have the potential to increase the efficiency and
coordination of research, boost the perceived independence and scientific integrity
of the research, or generate research not currently being conducted. Realizing such
anticipated gains could depend on many factors. This report will be updated upon
legislative activity.



Contents
Related Legislation in the 110th Congress...............................2
What Is Comparative Effectiveness Research?...........................4
Effectiveness: How Should It Be Measured?........................4
Effectiveness Is Complicated to Measure.......................4
Effectiveness Differs from Efficacy............................4
Costs: Should They Be Included?.................................5
Costs Are Complicated to Measure............................5
Inclusion Depends on Role in Health Care Decision Making........6
Cost-effectiveness and Cost-benefit: Two Ways to Include Costs....6
What Research Is Needed?..........................................7
Past and Current Research Efforts.................................7
Research in the Published Medical Literature....................7
Federal Funding of Technology Assessments...................11
Effect of Research on U.S. Policy and Practice......................14
Use of Technology Assessments in the United States.............14
Translating Research into Clinical Practice.................17
Use of Technology Assessments by Other Governments..........17
The Potential Contribution of a New Research Entity.................20
Factors that May Influence Its Success........................20
Appendix .......................................................22
U.S. Initiatives...............................................22
Academy of Managed Care Pharmacy.........................22
Agency for Healthcare Research and Quality...................22
Blue Cross Blue Shield Technology Evaluation Center...........25
Consumer Reports’ Best Buy Drugs Project....................26
DOD PharmacoEconomic Center............................26
Drug Effectiveness Review Project...........................27
ECRI Institute...........................................28
For-Profit Firms..........................................28
Medicare ...............................................29
Office of Technology Assessment............................32
Oregon Health Plan.......................................33
U.S. Preventive Services Task Force..........................35
Veterans Health Administration.............................35
Other Governments’ Initiatives..................................36
Australia ................................................36
Canada .................................................37
United Kingdom..........................................38



List of Figures
Figure 1. Share of Comparative Clinical Effectiveness Studies Published
in the Medical Literature, by Each Type of Entity, January
2004-August 2007.............................................9
List of Tables
Table 1. Types of Studies Conducted by Each Research Entity,
January 2004-August 2007.....................................10
Table 2. Other Federal Funding of Technology Assessments...............12
Table 3. Large Initiatives to Use Existing Technology Assessments.........16
Table 4. Comparison of the Use of Technology Assessments by
Other Governments...........................................19th
Table 5. List of Bills Introduced in the 110 Congress to Conduct
Comparative Clinical Effectiveness Research.......................41
Table 6. Description and Role of Comparative Effectiveness Research
in Bills Introduced in the 110th Congress to Conduct Comparative
Clinical Effectiveness Research..................................42
Table 7. List of Bills Introduced in the 109th Congress to Conduct
Comparative Clinical Effectiveness Research.......................47
Table 8. Description and Role of Comparative Effectiveness Research th
in Bills Introduced in the 109 Congress to Conduct Comparative
Clinical Effectiveness Research .................................48



Comparative Clinical Effectiveness and
Cost-Effectiveness Research: Background,
History, and Overview
Comparative clinical effectiveness research has been discussed as an avenue for
producing information to help health care decision makers, such as patients,
providers, and public and private payers, reach informed, evidence-based decisions.
Proponents maintain that such information would aid in using limited resources
effectively and efficiently, becomes even more necessary as resources become more1
limited, variation in medical practice patterns persist, and the rate of health care
spending continues to rise.2 A recent Institute of Medicine (IOM) report on the future3
of drug safety notes “what is newest is not always the best” and that decision makers
need information on the comparative risks and benefits of treatments and services.
Diverse governmental and non-governmental organizations have publicly
expressed their support or reservations about increased comparative clinical
effectiveness research. The House Ways and Means Subcommittee on Health held
a hearing on June 12, 2007, that discussed the creation of a public-private body that
would oversee comparative clinical effectiveness research. The director of the
Congressional Budget Office (CBO) concluded at the hearing that comparative
clinical effectiveness research, combined with changes in payment incentives, “offers
a promising mechanism for reducing health care costs to a significant degree over the
long term while maintaining or improving the health of Americans,” while
emphasizing that significant cost savings from such research would not been seen for
many years.4 The executive director of the Medicare Payment Advisory Commission
(MedPAC) stated that “there is not enough credible, empirically based comparative-
effectiveness information available to patients, providers, and payers to make


1 For more information, see Elliot S. Fisher et al., “The Implications of Regional Variations
in Medicare Spending, Part 1: The Content, Quality, and Accessibility of Care,” Annals of
Internal Medicine, vol. 38, no. 4 (February 18, 2003), pp. 273-287.
2 For example, see Earl P. Steinberg and Bryan R. Luce, “Evidence Based? Caveat Emptor!”
Health Affairs, vol. 24, no. 1 (January/February 2005), pp. 80-92.
3 For more information, see the Institute of Medicine, Committee on the Assessment of the
U.S. Drug Safety System, “The Future of Drug Safety: Promoting and Protecting the Health
of the Public,” The National Academies Press, 2007.
4 For more information, see Testimony of Peter R. Orszag, Director of Congressional Budget
Office, before the House Committee on Ways and Means Subcommittee on Health,
Research on the Comparative Effectiveness of Medical Treatments: Options for anthst
Expanded Federal Role, 110 Cong., 1 sess., June 12, 2007.

informed treatment decisions.”5 AARP, an advocacy group for persons aged 50 and
older, mentioned the need for comparative effectiveness studies for pharmaceuticals
as early as 2005 in their Solutions Statement to the White House Conference on
Aging.6 America’s Health Insurance Plans (AHIP), a trade association representing
health insurance plans, has urged Congress to give the Centers for Medicare and
Medicaid Services (CMS) the authority to use comparative effectiveness and cost-
effectiveness information in its coverage and reimbursement decisions.7 Jack Rowe,
the former chief executive officer of Aetna, has stated that employers are “dying” to
have information on the comparative effectiveness of treatments.8 On the other hand,
some have expressed reservations about funding increased comparative clinical
effectiveness research. Scott Gottlieb, a researcher at the American Enterprise
Institute for Public Policy Research (AEI), articulated problems he perceived with
government-sponsored prescription drug research, including poor study design, lack
of access to full study results, and bias in interpreting the results.9 Robert Goldberg,
vice president of the Center for Medicine in the Public Interest, argued that
comparative clinical effectiveness research ignores individual differences and is
biased towards concluding cheaper drugs are more effective.10
Related Legislation in the 110th Congress
A number of bills have been introduced that support comparative clinical
effectiveness research, including several in the 110th Congress. S. 3, the Medicare
Part D price negotiation bill sponsored by Senate Finance Committee Majority
Leader Max Baucus, would require the Director of Health and Human Services11
(HHS) to develop a prioritized list of comparative effectiveness research studies.
Representatives Tom Allen (D-ME) and Jo Ann Emerson (R-MO) co-sponsored H.R.


5 For more information, see Testimony of Mark E. Miller, Executive Director of the
Medicare Payment Advisory Commission, before the House Committee on Ways and Meansth
Subcommittee on Health, Producing Comparative-Effectiveness Information, 110 Cong.,st

1 sess., June 12, 2007.


6 For more information, see AARP, AARP Solutions Statement: White House Conference on
Aging, July 6, 2005, available at [http://www.whcoa.gov/about/des_events_reports/
aarpjuly6.pdf], accessed August 1, 2007.
7 Information reported by Mike Lillis, “AHIP Seeks to Inject Comparative Effectiveness,
Cost Data Into CMS Decisions,” Inside Health Policy, April 19, 2007.
8 For more information, see John Reichard, “Authoritative Center Urged for Comparing
Value of Treatments,” CQ HealthBeat, February 14, 2007.
9 For more information, see Scott Gottlieb, “The War on Expensive Drugs,” The Wall Street
Journal, August 30, 2007, A11.
10 For more information, see Robert Goldberg, “Medical Quackery,” Washington Times,
September 7, 2007.
11 S. 3 was introduced and passed by the Senate Finance Committee on April 12, 2007. The
bill did not receive enough votes to reach cloture on the Senate Floor.

2184,12 which would establish a public-private funding mechanism for comparative
clinical effectiveness research, overseen by an independent advisory board. The Act
would establish a trust fund for the research that would receive $100 million in
FY2008, $200 million in FY2009, and $900 million per year for FY2010-FY2012.
Similarly, H.R. 3162, the Children’s Health and Medicare Protection (CHAMP) Act
of 2007,13 would establish a public-private funding mechanism for comparative
clinical effectiveness research, overseen by an independent commission, and a trust
fund that would be appropriated at least $90 million in FY2008, $100 million in
FY2009, $110 million in 2010, and no more than $90 million in years thereafter.
CBO has stated that the information produced by the comparative effectiveness
portion of the CHAMP Act would reduce total spending by public and private
purchasers by $0.5 billion over 5 years and $6 billion over 10 years. Direct spending
by the federal government was estimated to be reduced by $0.1 billion over 5 years
and $1.3 billion over 10 years. Thus, the majority of the savings from the research
would be realized by private purchasers rather than by the federal government. The
net federal expenditures from the comparative effectiveness portion of the CHAMP
Act were estimated to be $0.5 billion over 5 years and $1.1 billion over 10 years.
CBO assumed the savings would primarily be realized through changes in
physicians’ practice patterns and, to a lesser extent, changes in coverage rules.14 The
Healthy Americans Act, S. 33415 and H.R. 316316, includes tax deduction, patent
extension, and market exclusivity incentives for pharmaceutical and medical device
manufacturers to conduct comparative clinical effectiveness research. The Josephine
Butler United States Health Service Act, H.R. 3000, would create a National Health
Board that includes a new institute — the National Institute of Evaluative Clinical
Research. Among the Institute’s responsibilities would be to identify the most
effective methods of prevention, diagnosis, and treatment and assist the National
Health Board in establishing clinical practice guidelines. More details about these
bills and others in the 109th and 110th Congress are included in the Appendix.
To help inform the discussion surrounding comparative clinical effectiveness
research, this report provides an overview and discusses past and current comparative
clinical effectiveness research and other forms of technology assessment in the
United States. This report also briefly discusses the use of technology assessment in
the U.S. and other countries, and the potential role of a new comparative
effectiveness research entity.


12 H.R. 2184 was introduced in the House Committee on Ways and Means Subcommittee
on Health on May 15, 2007.
13 H.R. 3162 was passed by the House of Representatives on August 1, 2007.
14 For more information, see letter from Peter R. Orszag, Director of the Congressional
Budget Office, to Chairman Pete Stark, September 5, 2007.
15 S. 334 was introduced in the Senate Finance Committee on January 18, 2007.
16 H.R. 3163 was introduced in the House Energy and Commerce, House Education and
Labor, House Ways and Means, and House Oversight and Government Reform Committees
on July 24, 2007.

What Is Comparative Effectiveness Research?
Comparative effectiveness research is a term that has been defined by people in
many different ways. All agree that comparative effectiveness research compares the
effectiveness of two or more health care services or treatments, and is one form of
health technology assessment. It compares outcomes resulting from different
treatments or services, and provides information about the relative effectiveness of
treatments.
Additional specifics about the research and its definition are sources of
contention. In particular:
!Effectiveness — How should effectiveness be measured? Should the
research compare only the effectiveness (the effect in routine clinical
practice) or also the efficacy (the effect under optimal conditions) of
treatments or services?
!Costs — Should costs be included in the research? Should the costs
be reported separately from the effectiveness results? Or should a
cost-effectiveness ratio be the ultimate goal?
Effectiveness: How Should It Be Measured?
Effectiveness Is Complicated to Measure. Measuring the benefit or
effectiveness is not a straightforward matter; which factors are included and how they
are counted can greatly affect the results. Quantifying benefits and effectiveness
often requires assumptions about the population benefitting from the treatment. For
example, to what extent will the benefits from the treatment vary across the country
and in different settings? More specifically, how should the benefits observed in a
clinical trial be extrapolated to the rest of the population? Researchers have debated17
such questions over the years, resulting in an expert consensus concerning best
research methods. These suggested methods include the practice of conducting
sensitivity analyses to assess how study results would change if parameters, such as
effectiveness, were measured differently.18
Effectiveness Differs from Efficacy. A treatment’s efficacy is the effect
of the treatment under optimal conditions. A treatment’s effectiveness is the effect19
of the treatment in routine clinical practice. For example, randomized clinical trials


17 For more information, see Marthe R. Gold et al., Cost-Effectiveness in Health and
Medicine (Oxford, U.K.: Oxford University Press, 1996).
18 For more information, see Anthony O’Hagan et al., “Incorporation of Uncertainty in
Health Economic Modelling Studies,” Pharmacoeconomics, vol. 23, no. 6 (2005), pp. 529-

536.


19 Efficacy and effectiveness may also be referred to as internal and external validity,
respectively. Internal validity is measured when a causal relationship is demonstrated
between the treatment and health outcome. External validity is measured when a
(continued...)

conducted for Food and Drug Administration (FDA) marketing approval typically
aim to assess the relative safety and efficacy of a treatment so as to best determine the
sole effect of the treatment, absent any other influential factors. Clinical trials for
FDA approval also typically compare the efficacy of an investigational treatment to
a placebo,20 rather than another treatment. Effectiveness research relaxes the strict
exclusionary criteria that are typically required in such trials, in order to assess the
treatment in the wide range of patients and environments in which the product is
actually used.
Efficacy and effectiveness research results may differ because often in clinical
practice, patients may have more than one illness, doses may vary, methods of
administering the treatment may vary, and patients may simultaneously take
treatments for multiple illnesses. Moreover, large segments of the potential patient
population are often excluded from efficacy trials in order to achieve a more uniform
study population.21 An often cited example is that many patients with high blood
pressure also have diabetes; yet, efficacy clinical trials for high blood pressure
treatments may not include patients with diabetes. As a result, any interaction
between blood pressure and diabetes medications may not be known until the
treatment is approved by the FDA and used in clinical practice. Also, different
patients may respond to treatments differently due to physiologic differences, such
as different metabolic rates of drugs and safety of anesthesia in surgical options.
Although conducted after FDA approval, post-marketing22 (also known as phase
IV) studies are not necessarily effectiveness studies, and only rarely could be
classified as comparative effectiveness studies. Post-marketing studies most often
assess any ongoing safety concerns of one drug or device rather than the effectiveness
of a product. Moreover, the few studies that compare two or more treatments often
only assess the equivalence or superiority of the study sponsor’s product, rather than
the relative effectiveness of competing products.
Costs: Should They Be Included?
Costs Are Complicated to Measure. Costs are not always easy to define
or measure. The total treatment costs may differ, sometimes dramatically, depending


19 (...continued)
relationship is demonstrated between the treatment and health outcome across different
settings, patients, and procedures for administering the treatment. For more information
about differences between efficacy and effectiveness research, see the Agency for
Healthcare Research and Quality, Criteria for Distinguishing Effectiveness From Efficacy
Trials in Systematic Reviews. Technical Review 12, AHRQ-06-0046, April 2006.
20 A placebo is an inactive treatment given to satisfy a patient’s expectation of treatment.
21 For more information about exclusion criteria in clinical trials, see Harriette G. C. Van
Spall et al. “Eligibility criteria of randomized controlled trials published in high-impact
general medical journals: a systematic sampling review,” JAMA, vol. 297, no. 11 (March 21,

2007), pp. 1233-1240.


22 For more information, see the FDA’s Introduction to Postmarketing Study Commitments,
available at [http://www.fda.gov/cder/pmc/], accessed April 24, 2007.

upon which perspective (e.g., patient, government payer, private insurer, society) is
taken in the analysis, and which costs are included.23 As with the measurement of
effectiveness, researchers have tried to resolve these issues through expert consensus
of best research methods and the practice of conducting sensitivity analyses.
Inclusion Depends on Role in Health Care Decision Making. Much
of the controversy surrounding whether costs should be included in comparative
effectiveness research lies in the questions: when, how, and by whom will the24
research results be used to make decisions? The issue is most controversial if
results that include costs are used to make insurance reimbursement, pricing, or
coverage decisions. The inclusion of costs in research tends to not be as
controversial when the results are not directly linked to medical and health policy
decision making. One reason for the controversy is that policymakers may disagree
about the way costs are measured or which costs are included in a research study.
Cost-effectiveness and Cost-benefit: Two Ways to Include Costs.
Cost-effectiveness and cost-benefit analysis are two frequently used techniques of
incorporating costs in the results of health technology assessments. The techniques
compare the costs to the health benefits received from services or treatments. Both
methods are used to help determine whether the additional health benefits of a
service or treatment can justify the additional costs. Cost-effectiveness and cost-
benefit differ in how the health benefits are measured. In cost-benefit analysis, the
health benefits are monetarized, and the results are stated either in the form of a ratio
or monetary difference between costs and benefits.25 In cost-effectiveness analyses,
the health benefits are commonly measured in non-monetary units, such as life years
(i.e., the additional years of life gained) or life years adjusted for quality (i.e., quality-
adjusted life years — QALYs), and the end product is usually a ratio of the costs and
benefits (e.g., dollars/QALY). Also, cost-effectiveness analysis always compares one
or more alternatives, while cost-benefit analysis can be used to assess a single option


23 For more information, see Alan M. Garber, “Cost-Effectiveness and Evidence Evaluation
as Criteria for Coverage Policy,” Health Affairs, (May 19, 2004), W4-284-296. Also see
Kevin Frick, Steven Kymes, and Gretchen Jacobson, “Cost-Effectiveness: How Do We
Avoid Making A Difficult Science Incomprehensible?” Ophthalmic Epidemiology, vol. 11,
no. 5 (December 2004), pp. 331-335.
24 The medical and health policy decision making process consists of layers of evidence.
The safety of a treatment is typically the first layer, such that a treatment must be deemed
safe before any other factors could be considered. The ordering of the other layers is
debated. The efficacy (and effectiveness, if available) of the treatment may or may not be
preceded by insurance coverage decisions. Decisions involving costs (i.e., pricing and
insurance reimbursement) may or may not be preceded by coverage decisions. Technology
assessments may occur at any point in the layers of decision making, since safety profile
comparisons, clinical guidelines, comparative effectiveness, cost-effectiveness, or
cost-benefit analyses may all be included under the technology assessment umbrella. For
more discussion of the role of cost-effectiveness in coverage decisions, see Alan M. Garber,
“Cost-Effectiveness and Evidence Evaluation as Criteria for Coverage Policy,” Health
Affairs, W4 (May 19, 2004), pp. 284-296.
25 For more information, see Michael E. Drummond et al., Methods for the Economic
Evaluation of Health Care Programmes, 3rd ed. (Oxford, U.K.: Oxford University Press,

2005).



(i.e., assessing whether the benefits are greater than the costs) or more than one
option.
What Research Is Needed?
Past and Current Research Efforts
In order to determine whether and what type of comparative effectiveness
research is needed, the scope and scale of current comparative effectiveness research
efforts must be understood. A survey of the published medical literature and a
review of the historical and current research initiatives provide a limited summary
of the scale and scope of the comparative effectiveness research that has been funded
and conducted. This section provides such a survey of the literature and reviews
health technology research initiatives in the U.S. The section also discusses how
comparative effectiveness research has been used in the U.S. and other countries and
the potential role of a new comparative effectiveness entity.
Research in the Published Medical Literature. The published medical
literature is one source of information that may help assess the extent to which
various types of entities are currently conducting comparative clinical effectiveness
research. We conducted a search of the published medical literature which included
all studies published in PubMed journals that compared the effectiveness of at least
two treatments or services between January 2004 and August 2007.26 The search was
not intended to be an exhaustive search of all comparative clinical effectiveness
studies, but rather was intended to summarize the information available from one
large source of recently completed studies. It did not include studies that compared
a treatment or service to a placebo. Studies conducted through initiatives discussed
later in this report were excluded from this literature search. Each study was
categorized by the type of research entity that conducted the study, which was
determined by the affiliation of the study’s contact author. The categories of types
of research entities were academic, private institute, pharmaceutical companies, and
government. A private institute was defined in this search as a for-profit or non-
profit research group that was not based at a university or pharmaceutical company.
Examples of private institutes include hospitals and private practices not affiliated
with universities, such as the Kaiser Permanente Medical Center and the Black Hills
Regional Eye Institute. Research conducted at Veterans Affairs (VA) hospitals was
categorized as government research. The relative share of studies published by
different types of entities is shown in Figure 1. The kinds of studies published by
each type of entity are shown in Table 1.
The published studies primarily focused on treatments for mental health
disorders and cardiovascular disease. Most comparative clinical effectiveness studies


26 PubMed is free digital archive of biomedical and life sciences journal literature at the
National Institutes of Health and includes over 17 million citations. Participation by
publishers in PubMed is voluntary.

in the medical literature were produced by academic researchers.27 Researchers
affiliated with pharmaceutical companies and the government have published
relatively few comparative clinical effectiveness studies in the medical literature.
Few studies focused on the comparative effectiveness of treatments in sub-
populations, which was defined as populations other than white middle-age males (or
females for diseases, such as ovarian cancer, that only occur in females). Sub-
populations, such as children, elderly, and non-white races, may respond to
treatments differently due to physiologic differences, such as different metabolic rates
of drugs and safety of anesthesia in surgical options; thus research including sub-
populations may help inform clinical practice. Also, few studies included patients
with more than one disease (i.e., comorbidities28). Since nearly 60% of
hospitalizations have at least one comorbidity (i.e., two diseases) and over 33% have
two or more (i.e., at least three diseases),29 this type of research is generally held to
help inform clinical decisions.


27 Notably, this result does not necessarily imply that academic researchers produce the most
comparative clinical effectiveness studies, since academic researchers are much more likely
than any other entity to publish their research in the medical literature.
28 Comorbidities are defined as conditions that exist at the same time as the primary
condition in the same patient. For more information, see National Center for Health
Statistics (NCHS), “Comorbidities,” available at [http://www.cdc.gov/nchs/datawh/
nchsdefs/comorbidities.htm], accessed August 26, 2007.
29 For more information, see the Agency for Healthcare Research and Quality,
“Hospitalization in the United States,” HCUP Fact Book No. 6, (2002). Available at
[http://www.ahrq.gov/data/hcup/factbk6/factbk6a.htm], accessed August 26, 2007.

Figure 1. Share of Comparative Clinical Effectiveness Studies
Published in the Medical Literature, by Each Type of Entity,
January 2004-August 2007


Pharmaceutical
G o vern m entcom panies
5%7%
Private
30%
Academ ic
58 %
Source: Congressional Research Service analysis from search of PubMed at the National Library of
Medicine .
Notes: The shares are based upon counts of studies and are not weighted by significance, cost, or any
other factors. The type of research entity that conducted the study was determined by the affiliation
of the studys contact author.

Table 1. Types of Studies Conducted by Each Research Entity,
January 2004-August 2007
Pharmaceutical
Type of EntityAcademicPrivateCompaniesGovernmentTotal
Number of studies653486113
Study topics
Cancer 2% 6% 0% 0% 3%
Cardiovascular
disease 17% 20% 12% 0% 17%
Diabetes 8% 3% 0% 33% 7%
Digestive
system 2% 3% 0% 0% 2%
Infectious
diseases 6% 8% 25% 17% 9%
Mental health
disorders 22% 11% 39% 50% 21%
Muscle, bone,
and joints3%3%0%0%3%
Ophthalmic
disorders 8% 20% 0% 0% 11%
Pain
management 8%17%12%0%11%
Pulmonary
diseases 9% 3% 0% 0% 5%
Other 15% 6% 12% 0% 11%
Total 100% 100% 100% 100% 100%
Included patients
with more than one
disease
(comorbidities) 6% 6% 0% 0% 5%
Included sub-
populations 18% 6% 12% 0% 13%
Source: Congressional Research Service analysis from search of PubMed at the National Library of
Medicine .
Note: The type of research entity that conducted the study was determined by the affiliation of the
studys contact author.



Federal Funding of Technology Assessments. Health technology
assessment, including comparative clinical effectiveness, cost-effectiveness, and
cost-benefit analysis, has been conducted for decades in the United States through
both public and private initiatives.30 Some of these initiatives in the United States
are ongoing, while others were terminated because of lack of funding. Further details
about the initiatives can be found in the Appendix. The initiatives’ timing and scale
are summarized in Table 2.
The Agency for Healthcare Research and Quality (AHRQ) and the National
Institutes of Health (NIH) are currently the largest federal funders of extramural
health technology assessments. Rather than conducting the research at the agency,
these executive-branch agencies within the Department of Health and Human
Services (HHS) primarily provide funding for academic and private sector
researchers. AHRQ in particular has several ongoing programs for health technology
assessments, including the Centers for Education and Research on Therapeutics
(CERTs), the Developing Evidence to Inform Decisions about Effectiveness
(DEcIDE) Program, Evidence-based Practice Centers (EPCs), and the Research
Initiative in Clinical Economics (RICE). These centers and programs conduct
technology assessments, comparative effectiveness research, pharmaceutical
outcomes research, and economic valuations of health care services and treatments.
Although some Institutes at the NIH provide some funding for health technology
assessments, unlike AHRQ, the NIH has not organized the research into centers or
programs. Each of the AHRQ programs differ in their clinical focus, purpose, and
types of technology assessments funded. For example, the EPCs are academic and
private sector research centers that have five-year research contracts with AHRQ
while funding from RICE is primarily allocated through competitive research grants.
Unlike AHRQ and the NIH, the Veterans Health Administration’s (VHA) Pharmacy
Benefits Management Strategic Healthcare Group (PBMSHG) and the Department
of Defense (DOD) PharmacoEconomic Center (PEC) do not out-source their health
technology assessments. Rather, the assessments are funded, conducted, and used
by the respective agency to make formulary and pricing decisions. Moreover, the
research funded by AHRQ and NIH is intended to be a public good and to aid all
health care decision makers, while the research from VHA and DOD centers is
intended to aid decision makers at the respective agencies.
AHRQ previously sponsored research through its Medical Treatment
Effectiveness Program (MEDTEP). Among other projects the program funded the
Patient Outcomes Research Teams (PORTs). Funding for this program was
terminated in 1995 for many reasons, including criticisms over the quality of the
PORT guidelines. The Congressional Office of Technology Assessment (OTA) also
previously funded and conducted technology assessments. The OTA was a
nonpartisan congressional agency that conducted health and non-health technology
assessments for Congress. The agency would use in-house researchers as well as
experts outside of the agency. It was disbanded in 1995 partly due to controversy
over its technology assessments, and partly for other reasons discussed in the
Appendix.


30 As previously mentioned, the studies produced from these initiatives were excluded from
the survey of the published medical literature.

CRS-12
Table 2. Other Federal Funding of Technology Assessments
Number of
Years ofTechnologya
InitiativeExistenceAssessmentsTypes of Technology AssessmentsNotes
ograms
s1999-present30-50 publicationsHealth outcomes and cost-effectivenessAdministered through cooperative agreement
in medical journalsresearch of drugs and devicesbetween AHRQ and FDA; Also conducted in
per year; partnership with private corporations; 10 centers
over 200 currentare affiliated with academic institutions and the
iki/CRS-RL34208projectsother is the HMO Research Network
g/wDE2004-present15 reports sinceHealth outcomes and comparativeEstablished by section 1013 of the Medicare
s.orinceptioneffectiveness researchPrescription Drug, Improvement, and
leakModernization Act of 2003 (MMA); 9 centers
://wikiare at universities and others are at Acumen,Brigham and Women’s Hospital, Harvard
httpPilgrim Health Care, Outcome Sciences, and
RTI International
1997-present155 reports sinceResearch on effectiveness, cost, and safety of1 center supports USPSTF work; 3 centers
inceptiontechnologies, evidence reports, and researchconduct technology assessments for CMS; 10
methodscenters are affiliated with academic institutions
and the others are the BCBS TEC, the ECRI
Institute, and the Rand Corporation



CRS-13
Number of
Years ofTechnologya
InitiativeExistenceAssessmentsTypes of Technology AssessmentsNotes
EP1989-1995N/AHealth outcomes and cost-effectivenessFunded PORTs; Results of MEDTEP sponsored
research, guidelines development, databaseresearch contributed to decisions to decrease the
development, and methods of disseminatingagency’s budget by 20% in 1995
information
2001-presentOver 40 grants forClinical economics research, including cost-Funding primarily allocated through competitive
clinical economicsbenefit, cost-effectiveness, and healthresearch grants
research fundedoutcomes research, and research methods
iki/CRS-RL34208since inception
g/w1992-presentN/AEvaluations of the cost and clinical outcomesHelps establish Tri-Service Drug Formulary list
s.orof pharmaceuticals, clinical practice guidelinesand the National Mail Order Pharmacy list; Also
leakworks with the VHA.
://wikiA1972-1995Approximately 50Any type of technology assessment requestedDisbanded as part of the budget reductions inth
httpreports per yearthe 104 Congress
1995-presentN/AEvaluations of the cost and clinical outcomesEstablishes the VA formulary, drug pricing, and
of pharmaceuticals, clinical practice guidelines,contracts; Also works with the DOD.
and drug monographs
Congressional Research Service analysis.
N/A = Information not available; AHRQ = Agency for Healthcare Research and Quality; CERTs = Centers for Education and Research on Therapeutics; CMS = Centers for
icare and Medicaid Services; DEcIDE = Developing Evidence to Inform Decisions about Effectiveness; DOD = Department of Defense; EPCs = Evidence-based Practice Centers;
EP = Medical Treatment Effectiveness Program; OTA = Congressional Office of Technology Assessment; PBMSHG = Pharmacy Benefits Management Strategic Healthcare
up; PEC = PharmacoEconomic Center; PORTs = Patient Outcomes Research Teams; RICE = Research Initiative in Clinical Economics; USPSTF = U.S. Preventive Services Task
= Department of Veterans Affairs; VHA = Veterans Health Administration.
ber of studies from initiatives’ websites as of August 2007.



Effect of Research on U.S. Policy and Practice
Health technology assessments can be used for many purposes, including aiding
decisions by
!insurers for coverage, drug formulary placement, and pricing of
technologies;
!health care providers (e.g., physicians, nurses) for improving clinical
practice; and
!consumers for making informed decisions.
Use of Technology Assessments in the United States. Over the past
two decades, many organizations have tried to use existing technology assessments
for health care decisions. Some organizations that have used these assessments
include the Academy of Managed Care Pharmacy (AMCP), Consumer Reports’ Best
Buy Drugs project, the DOD PEC, for-profit firms (including consulting firms,
private insurers, and pharmaceutical manufacturers), the Centers for Medicare and
Medicaid Services (CMS), the Oregon Health Plan, and the VHA PBMSHG. The
organizations’ timing, target audience, and purpose are summarized in Table 3.
With the exception of Consumer Reports’ Best Buy Drugs, these organizations
have used technology assessments for insurers’ coverage, formulary, and pricing
decisions. The AMCP promulgated guidelines for pharmaceutical companies’
submissions for formulary assessments by private health insurers. The guidelines
suggest comparisons to other products and a model that predicts the costs and health
outcomes with the product in the health insurance plan. Research suggests that many
pharmaceutical companies have adopted the guidelines; a survey found that managed31
care organizations had dossiers for 40% of drugs under review for coverage. Best
Buy Drugs is a non-profit project of Consumer Reports that combines comparative
effectiveness information with drug pricing information to select their “Best Buy
picks” for health care consumers and providers. The DOD PEC monitors drugs’ use,
cost, and pharmacoeconomics within the Military Health System. The PEC has been
credited by the DOD with improving patient safety and decreasing costs.32 Both the
Medicare program and the Oregon Health Plan encountered opposition when the
programs tried to incorporate cost-effectiveness analyses into policy decisions. In
response, the Oregon Health Plan modified their program so that coverage was not


31 For more information, see Michael B. Nichol et al., “Opinions Regarding the Academy
of Managed Care Pharmacy Dossier Submission Guidelines: Results of a Small Survey of
Managed Care Organizations and Pharmaceutical Manufacturers,” Journal of Managed
Care Pharmacy, vol. 13, no. 4 (May 2007), pp. 360-371.
32 For more information, see Department of Defense PharmacoEconomic Center: Estimated
Cost Avoidance in DOD MTFs Due to National Pharmaceutical Contracts, Fiscal Years
1999-2002 (Fact Sheet), San Antonio, TX. Department of Defense PharmacoEconomic
Center, 2004. Also see Department of Defense PharmacoEconomic Center; PDTS Factoids
thru 31 December 2003 (Fact Sheet), San Antonio, TX. Department of Defense
PharmacoEconomic Center. 2004.

based strictly on cost-effectiveness and, since January 2006, Medicare has explicitly
excluded treatment costs from its national coverage determinations.33 The VHA
PBMSHG compares the effectiveness of drugs to produce clinical practice guidelines
and drug monographs, and to establish the VA formulary, drug pricing, and contracts.
Further details about the initiatives can be found in the Appendix.


33 For more information, see Centers for Medicare and Medicaid Services, “Guidance for
the Public, Industry, and CMS Staff: Factors CMS Considers in Opening a National
Coverage Determination,” April 11, 2006, available at [http://www.cms.hhs.gov/mcd/
ncpc_view_document.asp?id=6], accessed August 10, 2007. See also Centers for Medicare
and Medicaid Services, “Guidance for the Public, Industry, and CMS Staff: Factors CMS
Considers in Commissioning External Technology Assessments,” April 11, 2006, available
at [http://www.cms.hhs.gov/mcd/ncpc_view_document.asp?id=7].

CRS-16
Table 3. Large Initiatives to Use Existing Technology Assessments
OrganizationYears UsedTarget AudiencePurpose of InitiativeNotes
CP 2001-presentPrivate insurance formularyTo standardize dossier format for submitting
decisionsinformation to private insurers
t Buy Drugs2004-presentAll health care decision makersTo provide comparative effectiveness information toSynthesizes DERP reports and combines
consumers and providersreports with drug pricing information to
select drugs that are “best buys
SNever used forMedicare coverage determinationsTo aid coverage decisionsFirst proposed to use cost-effectiveness in
NCDs. May be used1989 for NCDs.
for LCDs.
iki/CRS-RL34208RP2001-presentMedicaid programs and otherTo make available information regarding drugs’Originally sponsored by the Oregon
g/whealth care decision makerscomparative effectiveness and safetylegislature; used by Consumer Reports
s.orBest Buy Drugs project
leakEC1992-presentDOD formulary, coverage, andTo improve the clinical, economic, and humanisticEstablished in response to rising DOD
pricing decisionsoutcomes of drug therapy for military personnelpharmaceutical expenditures
://wikion Health Plan1993a-presentOregon Medicaid programTo select covered services in a judicious manner in
httporder to expand the population of Oregonians
covered by Medicaid
PSTF1984-presentOver 100 clinical evaluationsCompares methods of preventing diseasesFunded by AHRQ since 1998
A PBMSHG1995-presentVHA formulary, coverage, andTo encourage the appropriate use of medications
pricing decisions
Congressional Research Service analysis.
AMCP = Academy of Managed Care Pharmacy; CMS = Centers for Medicare and Medicaid Services; DERP = Drug Effectiveness Review Project; DOD PEC = Department
ense PharmacoEconomic Center; NCD = National Coverage Determination; LCD = Local Coverage Determination; VHA PBMSHG = Veterans Health Administration Pharmacy
fits Management Strategic Healthcare Group.
he legislation responsible for the Oregon Health Plan was passed by the Oregon legislature in 1989. The program was granted a federal waiver in March 1993 and was implemented
in 1994.



Translating Research into Clinical Practice. Depending on many
factors, new information about treatments’ safety or effectiveness may or may not
change physicians’ clinical practice. For example, one study suggested that simply
the wording of a study’s results may significantly influence whether physicians34
change which drugs they prescribe. Another study found that dissemination of
educational materials alone was ineffective in changing physicians’ prescribing
habits. More active (and costly) methods, such as one-to-one educational outreach,
multifaceted interventions, and participatory clinical guideline development were35
found to be more effective. Other more difficult factors to change, such as the
management structure of the private insurer employing the physician, were also36
found to influence prescribing habits. Researchers and policy makers have tested
many methods for changing clinical practice, and optimal strategies have evolved37
over the years. Overall, changing clinical practice is not a simple or inexpensive
process, and requires more than disseminating information and expecting individuals
to comb-through research studies and find ways to translate the findings into action.
Use of Technology Assessments by Other Governments.
Comparative and cost-effectiveness analysis are given explicit roles in some other
countries. In a 2001 survey of 11 OECD member countries that use technology
assessment,38 such as comparative effectiveness or cost-effectiveness, three countries
(Belgium, Italy, and the Netherlands) reported that the goal of using technology
assesssment was cost containment, three (Belgium, the Netherlands, and Portugal)39
indicated global budgeting, and five (Australia, the Netherlands, Portugal, Sweden,
and the U.K.) reported value-for money. Ten of the countries reported that a federal
agency is responsible for either processing or conducting the assessments. Three of
the countries (Australia, Belgium, and France) would only appoint consultants with
no links to pharmaceutical manufacturers, while three other countries (the
Netherlands, Portugal, and Switzerland) would only appoint consultants with no links
to the manufacturer of the drug under review. Three of the countries (Japan,


34 For more information see Clifton R. Lacy et al., “Impact of Presentation of Research
Results on Likelihood of Prescribing Medications to Patients with Left Ventricular
Dysfunction,” American Journal of Cardiology, vol. 87 (January 15, 2001), pp. 203-207.
35 For more information, see Sallie-Anne Pearson et al., “Changing Medication Use in
Managed Care: A Critical Review of the Available Evidence,” American Journal of
Managed Care, vol. 9, no. 11 (November 2003), pp. 715-731.
36 For more information, see Sallie-Anne Pearson et al., ibid.
37 For more information, see C. David Naylor, “The Complex World of Prescribing
Behavior,” JAMA, vol. 291, no. 1 (January 7, 2004), pp. 104-106. See also Donald M.
Berwick, “Disseminating Innovations in Health Care,” JAMA, vol. 289, no. 15 (April 16,

2003), pp. 1035-1040.


38 For more information about the survey, see Michael Dickson, Jeremy Hurst, and Stephane
Jacobzone, “Survey of Pharmacoeconomic Assessment Activity in Eleven Countries,”
OECD Health Working Papers, No. 4 (2003). Note that not all countries responded to every
question.
39 Global budgeting refers to allocating health systems’ financial resources.

Belgium40 and the U.K.) noted that the assessment may be completed by the payer,
while the other countries indicated that the assessment would only be completed by
the product manufacturer. Belgium was the only country that reported that
technology assessments reduced total drug expenditures. Italy and Portugal noted
that it reduced unnecessary drug use, while Australia, Belgium, and Portugal
indicated that it improved the cost-effectiveness of drug prescribing.41 None of the
countries reported that lack of co-operation from pharmaceutical companies was an
obstacle to obtaining improved results from technology assessment.
Three countries that are often as examples of governments using health
technology assessments are the U.K., Australia, and Canada. Use of health
technology assessments in these countries is summarized in Table 4. Further details
about how these three countries use technology assessments can be found in the
Appendix.


40 Belgium reported the assessment may be completed by either the government or the
product manufacturer.
41 Note that only five of the surveyed countries responded to the latter two questions.

Table 4. Comparison of the Use of Technology Assessments by
Other Governments
Produces
new
How do theprimary
Years ofAssessesresults effectdata or
existence ofbudgetarycoverage oranalyzes
technologyIncludes cost-impact ofinclusion in aexisting
Count ry assessment ef f ectiveness? product ? f ormulary? dat a ?
U.K.1999-YesNoDevelops aExisting data
presentnegative list:
NHS will not
pay for
treatments until
NICE
determines how,
by whom, and
when the
treatment
should be used
AustraliaPBAC: aYesYesDevelops aExisting data

1953-positive list:


presentOnly products
with positive
results can be
added to the
formulary
CanadaCADTH:YesNoNo mandatoryExisting data
1990- b effect
present
Source: Congressional Research Service analysis.
Notes: NHS = National Health Service; NICE = National Institute for Health and Clinical Excellence;
PBAC = Pharmaceutical Benefits Advisory Committee; CADTH = Canadian Agency for Drugs and
Technologies in Health.
a. Analysis of comparative effectiveness and cost-effectiveness became mandatory in PBAC in 1993.
b. The agency did not become a permanent entity until 1993.



The Potential Contribution of a New Research Entity
The multitude of current comparative effectiveness research entities in the U.S.
introduces the question: why would a new entity be needed to conduct more
comparative clinical effectiveness research? Many entities are currently conducting
comparative effectiveness research, but the results are not centralized nor are they
necessarily in a format that is easy for health care decision makers to use. Thus, one
possible reason that could be offered in support of a new research entity might be
increased efficiency and coordination of research. The entity could also arguably
improve researchers’ independence and scientific integrity, or spawn the genesis of
research not currently being conducted on drugs, other health technologies, or
services.
Factors that May Influence Its Success. Many factors might influence
whether the aforementioned potential gains from a new entity could be realized.
Some of these influential factors might be determined when the entity is established.
The ideal structure, funding source,42 mission, and authority of the entity may depend
upon the intended use of the research. For example, if the entity aims to influence
insurers’ decisions, then input from these stakeholders may help achieve this goal.
If the entity aims to change clinical practice, then decision makers may wish to plan
how the new research will help achieve this goal. Additionally, if, like the OTA, the
audience is Congress, then there may be some benefit to establishing the entity as a
congressional agency. There may also be some efficiency gains to having the agency
work with existing agencies in the executive branch, such as AHRQ or NIH.
Other factors influential to the entity’s success would more likely be determined
by the entity’s administration, including:
!Which treatments would be studied?
!Would different types of treatment options, such as drugs and
surgery, be compared to each other?
!Would the research methods include systematic reviews, decision
models, and observational studies, as well as randomized trials?
!Who would oversee and review the studies’ methods, timing, and
clinical endpoints?


42 Notably, both pharmaceutical manufacturers and the federal government have been
accused of withholding the results of studies they funded. For more information, see Scott
Gottlieb, “The War on Expensive Drugs,” The Wall Street Journal, August 30, 2007, A11.
See also Shankar Vedantam, “Journals Insist Drug Manufacturers Register All Trials;
Editors Say That, Otherwise, Studies Will Not Be Published; Goal Is To Ferret Out
Suppressed Data,” Washington Post, September 9, 2004, p. A02. Also see Barry Meier,
“Contracts Keep Drug Research Out Of Reach,” New York Times, November 29, 2004, p.
A01.

!Which researchers and what expertise would be required to conduct
the studies?
!How would the results be presented and used?
!How would the political support for the entity be maintained?
The answers to these questions could have repercussions on many interested parties
including physicians, patients, payers, manufacturers, researchers, and federal
agencies.
For example, the timing of the research could influence the impact of the
research, since the amount of information that is known about a treatment differs at
different time periods. The issue is that conclusions may need to be modified when
more information becomes available in a particular research area. On the one hand,
waiting for perfect information on a treatment before conducting any analyses would
help curb modifications, but any resulting conclusions may have a limited impact on
improving clinical decision making. On the other hand, analyzing areas with
imperfect information would be more likely to have a large impact on clinical
decision making, but the conclusions may change once more information becomes
available. A middle, but imperfect, option would be to re-evaluate conclusions as
more information becomes available; while this option would allow all information
to be incorporated into decisions in a timely manner, it would also increase the
overall costs of technology assessments. A new entity might need to grapple with
these types of decisions.



Appendix
U.S. Initiatives
Academy of Managed Care Pharmacy. In 2001, Academy of Managed
Care Pharmacy (AMCP) promulgated guidelines, known as the AMCP Format for
Formulary Submissions, for conducting formulary assessments, including economic
evaluations.43 The purpose of the guidelines was to help ensure that any increased
utilization of pharmaceuticals and vaccines was based on good scientific evidence
and value. The guidelines encouraged pharmaceutical manufacturers to submit a
dossier with clinical and economic data from published and unpublished studies,
along with an economic model that predicts the costs and health outcomes with the
product in the health plan. The dossier also includes a section on the comparative
pharmacokinetic and pharmacologic data for other agents commonly used to treat the44
condition. The dossiers have become an industry standard, and are used by
pharmacy and therapeutics (P&T) committees of managed care organizations and
health insurers.
A recent survey found that managed care organizations had dossiers for 40% of
drugs under review for coverage. Fifty-three percent of the dossiers received
included budget-impact models and 39.3% included cost-effectiveness or cost-benefit
analyses. Less than half of the economic models were deemed adequate by the P&T
committees. Nearly two-thirds of survey respondents indicated that P&T committees
modified the economic model on the dossier because pharmaceutical manufacturers45
did not make models directly applicable to the health plan’s population.
Agency for Healthcare Research and Quality. The agency, formerly
known as the Agency Health Care Policy and Research (AHCPR), was established
in 1989 as an agency within the Department of HHS. The agency’s statutory
responsibilities included outcomes research and clinical practice guidelines
development. The Medical Treatment Effectiveness Program (MEDTEP) was46
established in 1989 as part of AHCPR. MEDTEP funded effectiveness research,


43 For more information, see Dwight S. Fullerton, Debbie Atherly, and Sean D. Sullivan,
“Showing Outcomes and Proving Value Brings Success,” Managed Care Interface, vol. 14,
no. 6 (2001), pp. 63-65.
44 For more information, see Jack McCain, “System Helps P&T Committees Get
Pharmacoeconomic Data They Need,” Managed Care, April 2001, available at
[http://www.managedcaremag.com/archives/0104/0104.amcp.html], accessed August 15,

2007.


45 For more information, see Michael B. Nichol et al., “Opinions Regarding the Academy
of Managed Care Pharmacy Dossier Submission Guidelines: Results of a Small Survey of
Managed Care Organizations and Pharmaceutical Manufacturers,” Journal of Managed
Care Pharmacy, vol. 13, no. 4 (May 2007), pp. 360-371.
46 For more information about MEDTEP, see Claire W. Maklan, Richard Greene, and Mary
A. Cummings, “Methodological Challenges and Innovations in Patient Outcomes Research,”
Medical Care, vol. 32, no. 7 (July, 1994), pp. JS13-JS21.

guideline development, database development, and methods of disseminating
information.
In 1992, Congress directed the AHCPR to incorporate cost-effectiveness
information in its technology assessments and clinical practice guidelines. The use
of cost-effectiveness and the development of the clinical practice guidelines
generated controversy and criticisms. The criticism included critiques from IOM
committees, the Government Accountability Office (GAO), the Physician Payment
Review Commission (PPRC), the Congressional Office of Technology Assessment
(OTA), and an influential lobbyist group of orthopedic surgeons.47 The agency was
also criticized for its role in the Clinton health care reform plan. In 1995, partially
in response to the criticism and concerns, Congress sharply decreased the FY1997
budget for AHCPR by 20%, thereby ending the funding for MEDTEP. From 1995
to 1999, AHCPR received operating funds through annual appropriations.
The agency was reauthorized and renamed the Agency for Healthcare Research
and Quality (AHRQ) in 1999, and now has many centers and programs that conduct
inter-related research on health care treatments. These include the Centers for
Education and Research on Therapeutics (CERTs), the Developing Evidence to
Inform Decisions about Effectiveness (DEcIDE) Program, the Evidence-based
Practice Centers (EPCs), and the Research Initiative in Clinical Economics (RICE),
which conduct technology assessments, comparative effectiveness research,
pharmaceutical outcomes research, and economic valuations of health care services
and treatments, respectively.
!Centers for Education and Research on Therapeutics. AHRQ
funds pharmaceutical outcomes research through the CERTs, which
is a national demonstration program for education and research on
the optimal use of drugs, biologicals, and medical devices. AHRQ
was given the responsibility of administering the program in 1997 as
part of the Food and Drug Administration Modernization Act
(FDAMA; P.L. 105-115), and the first centers were funded in 1999.
The program is administered as a cooperative agreement by AHRQ
in consultation with the FDA. Some of the research is also
conducted in partnership with private corporations, such as insurers
or pharmaceutical manufacturers. The research compares the health
risks, benefits, cost-effectiveness, economic implications, and


47 For more information, see Bradford H. Gray, Michael K. Gusmano, and Sara R. Collins,
“AHCPR and the Changing Politics of Health Services Research,” Health Affairs, 2003,
W283-307. See also testimony of Government Accountability Office (GAO) Director of
Health Financing and Public Health Issues Sarah F. Jagger, in the U.S. Congress, House of
Representatives, Committee on Ways and Means, Subcommittee on Health, Practiceth
Guidelines: Overview of Agency for Health Care Policy and Research Efforts, 104 Cong.,st

1 sess., July 25, 1995, GAO/T-HEHS-95-221, available at [http://archive.gao.gov/


t2pbat1/154801.pdf]. See also Physician Payment Review Commission, Annual Report to
Congress (Washington: PPRC, 1995). See also U.S. Office of Technology Assessment,
Identifying Health Technologies That Work: Searching for Evidence, Pub. No OTA-H-608
(Washington: U.S. Government Printing Office, September 1994).

interactions of treatments.48 Some of the research also examines the
cost-effectiveness of treatments. Currently, 10 of the 11 centers are
affiliated with academic institutions.
!Developing Evidence to Inform Decisions about Effectiveness
Program. Section 1013 of the MMA authorizes AHRQ to conduct
and support research on outcomes, comparative clinical
effectiveness, and appropriateness of pharmaceuticals, devices, and
health care services. The section prohibits the Administrator of
CMS from using the data produced under the section to withhold
coverage of a prescription drug. Although the section authorized
$50 million to be appropriated for the research in 2004, AHRQ has
been appropriated $15 million each year for carrying out the
research. AHRQ created the DEcIDE program to tackle the
responsibilities described in section 1013. Like the EPCs, the
DEcIDE centers are primarily based at universities. Unlike the
EPCs, the DEcIDE centers do not examine the cost-effectiveness of
technologies, but rather focus on health outcomes and comparative49
clinical effectiveness. As of August 2007, the agency has funded
15 projects that evaluate the comparative effectiveness of health care
treatments.
!Evidence-based Practice Centers Program. The purpose of the
EPC program is to improve the quality, effectiveness, and
appropriateness of health care through technology assessments,
evidence reports, and research on the methods for systematic
reviews. The reports inform public and private insurers’ coverage
decisions, and are used to develop quality measures, educational
materials, guidelines, and research agendas. Cost-effectiveness
analysis has been used as a research tool in some of the reports.50
Topics for technology assessments are nominated by AHRQ’s
non-federal partners51 and assessments tend to be completed in
approximately 15 months.52 Thirteen EPCs were awarded five-year


48 For more information about CERTS, see Agency for Healthcare Research and Quality
(AHRQ), “Centers for Education and Research on Therapeutics Fact Shee,” available at
[http://www.ahrq.gov/clinic/certsovr.pdf], accessed August 15, 2007.
49 For more information on DEcIDE centers, see Agency for Healthcare Research and
Quality (AHRQ), “Overview of the DEcIDE Research Network,” available at
[http://effectivehealthcare.ahrq.gov/decide/index.cfm], accessed August 15, 2007.
50 For more information, see Mark Helfand, “Incorporating Information About Cost-
Effectiveness Into Evidence-Based Decision Making,” Medical Care, vol. 43, no. 7 suppl.
(July 2005), pp. II-33-II43.
51 For more information about the procedures for topics nominations, see AHRQ, “EPC
Topic Nomination & Selection,” available at [http://www.ahrq.gov/clinic/epc/epctopicn.
htm], accessed August 15, 2007.
52 Agency for Healthcare Research and Quality (AHRQ), “EPC Topic Nomination &
(continued...)

contracts with AHRQ in 2002. Three of the Centers (Duke
University, ECRI, and Tufts University-New England Medical
Center) specialize in technology assessments for CMS to inform
national coverage decisions for the Medicare program and provide
information to Medicare carriers.53 One center (Oregon Health &
Science University), supports the work of the U.S. Preventive
Services Task Force.54 Ten of the centers are affiliated with
academic institutions and the remainder are private institutions. Ten
are based in the U.S., and the other three are based in Canada. As of
August 2007, 155 evidence reports had been published by the EPC
program.
!Research Initiative in Clinical Economics. Begun in 2001, RICE
funds research on the cost-effectiveness, cost-benefit, and methods
for estimating the value of health care interventions. Although
focused on cost-effectiveness, this research has not sparked
controversy. Unlike other initiatives, this research has not been used
for clinical practice guidelines or coverage decisions, and thus has
not been explicitly connected to policy recommendations or
implementation.
Blue Cross Blue Shield Technology Evaluation Center. The
Technology Evaluation Center (TEC) of the BlueCross BlueShield (BCBS)
Association has been assessing the relative effectiveness and appropriateness of
different technologies since 1985.55 AHRQ designated and funded the TEC as one
of its first Evidence-based Practice Centers (EPCs) in 1997, and renewed the
designation for an additional five years in 2002.56 The TEC relies upon medical and
research employees to conduct the evaluations, under the guidance of their Medical
Advisory Panel of clinical experts. The Center produced 17 evaluations in 2005, 14
in 2006, and 4 between January and August 2007. The Center’s evaluations focus
on the relative effectiveness of technologies, particularly with regard to the effect
upon health outcomes, such as length of life, quality of life, and functional abilities.


52 (...continued)
Selection,” available at [http://www.ahrq.gov/clinic/epc/epctopicn.htm], accessed August

15, 2007.


53 For more information, see AHRQ, “Technology Assessments,” available at
[http://www.ahrq.gov/clinic/techix.htm], accessed August 15, 2007.
54 For more information, see Wilhemine Miller, “Value-Based Coverage Policy in the United
States and the United Kingdom: Different Paths to a Common Goal,” National Health
Policy Forum, November 29, 2006. See also AHRQ, “U.S. Preventive Services Task Force
(USPSTF),” available at [http://www.ahrq.gov/clinic/uspstfix.htm], accessed August 15,

2007.


55 For more information, see BlueCross BlueShield Association, “Technology Evaluation
Center;” available at [http://www.bcbs.com/betterknowledge/tec/], accessed August 6, 2007.
56 For more information, see Agency for Healthcare Research and Quality, “Blue Cross and
Blue Shield Association, Technology Evaluation Center (TEC),” available at
[http://www.ahrq.gov/clinic/epc/bcbsatec.htm], accessed August 6, 2007.

The TEC compares the effectiveness of pharmaceuticals, medical devices, and health
services. Cost-effectiveness analyses are mentioned by the TEC as a potential type
of special technology assessment the Center may undertake;57 however, since 2005,
none of the publicly available assessments have analyzed the cost-effectiveness of
technologies. All evaluations use the same criteria, approach for reviewing the
evidence, and format for reporting the results. The evaluations are intended to be for
informational purposes only and are not characterized as recommendations or
guidelines. All completed evaluations are available for free on the center’s website,
along with the list of technology evaluations in process.
Consumer Reports’ Best Buy Drugs Project. Consumer Reports’ Best
Buy Drugs is a non-profit project of Consumer Reports that is primarily supported58
by educational grants. The project synthesizes DERP findings in order to provide
comparative effectiveness information about drugs to health care consumers and
providers, and selects “Best Buy picks” within drug classes; the most influential
factor in the selection process is the drug’s effectiveness. The summaries include
information on effectiveness, safety, and price. The drug prices are national average
cash prices.59 The summaries are available for free on the project’s website, and are
updated as new information becomes available.
DOD PharmacoEconomic Center. The Department of Defense (DOD)
PharmacoEconomic Center (PEC) was established in 1992 in response to rising DOD
pharmaceutical expenditures.60 Its mission is to “improve the clinical, economic, and
humanistic outcomes of drug therapy in support of the readiness and managed
healthcare missions of the Military Health System.”61 The center performs
cost-effectiveness analyses, works with the DOD P&T committee to establish the
Tri-Service Drug Formulary list and the National Mail Order Pharmacy formulary
list, provides drug treatment guidelines with the VHA, and monitors drugs’ use, cost,
and pharmacoeconomics within the Military Health System. Some of the evaluations
by the PEC are publicly available. The PEC publishes a monthly newsletter called
the PEC Update “to educate health care providers and other pharmacy benefit
stakeholders about cost-effective drug therapy.”62 PEC analyses have shown that the


57 For more information, see BlueCross BlueShield Association, “What is the Technology
Evaluation Center?” Available at [http://www.bcbs.com/betterknowledge/tec/what-is-tec.
html], accessed August 6, 2007.
58 For more information, see Consumer Reports Best Buy Drugs at
[http://www.crbestbuydrugs.org/aboutus.shtml], accessed August 7, 2007.
59 The project notes that, since prices vary widely across communities and the nation, the
prices may not reflect what health care consumers pay at the pharmacy counter.
60 For more information, see Kevin Ridderhoff and Daniel Remund, “The Department of
Defense Pharmacy Benefit Management Program,” Military Medicine, vol. 170, no. 4 (April

2005), pp. 302-304.


61 For more information, see The Department of Defense Pharmacoeconomic Center at
[http://www.pec.ha.osd.mil/], accessed August 16, 2007.
62 For more information, see Department of Defense Pharmacoeconomic Center at
[http://www.pec.ha.osd.mil/mission.htm], accessed August 28, 2007.

center has improved patient safety and decreased costs for the Military Health
System.63
Drug Effectiveness Review Project. In 2001, the Oregon state legislature
began commissioning, through the Oregon Medicaid program, the Oregon Health
Science University (OHSU) to assess the comparative clinical effectiveness and
safety of drugs in clinical practice. The initiative was named the Drug Effectiveness
Review Project (DERP).64 OHSU was a logical location for the initiative since, at
the time, it was an AHRQ funded EPC; as such, it completed systematic literature
reviews to produce evidence reports and technology assessments. The reviews were
viewed as a way to equalize buyers’ and sellers’ information about heterogeneous
products.65 Credibility and transparency of the research were viewed as crucial to the
success of the project, and DERP’s conflict of interest policy forbids its reviewers
from having financial ties with the companies whose products they are evaluating.66
Currently, a team of researchers at OHSU coordinate the reviews with experts
in the clinical area. The reviews incorporate a scientific literature review as well as
assessments of the evidence on the effectiveness, safety and adverse effects of the
drugs nationwide, as well as in sub-populations. Cost information is explicitly
excluded from the reviews. The reviews only compare drugs within a class, and do
not compare the effectiveness of medical devices or health services. The primary
audience for the DERP reviews is the state Medicaid programs, which use them to
help inform Medicaid drug coverage decisions. Topics are chosen at biannual public
meetings with the state pharmacy directors and medical directors from the funding67
Medicaid programs; the selection is based upon Medicaid expenditures, the
potential usefulness of a review, and availability of data. Once a drug class is chosen,
a solicitation for information is sent to all pharmaceutical manufacturers with
products in the class of interest. Any information provided to DERP by


63 For more information, see Department of Defense PharmacoEconomic Center: Estimated
Cost Avoidance in DOD MTFs Due to National Pharmaceutical Contracts, Fiscal Years
1999-2002 (Fact Sheet), San Antonio, TX. Department of Defense PharmacoEconomic
Center, 2004. Also see Department of Defense PharmacoEconomic Center; PDTS Factoids
thru 31 December 2003 (Fact Sheet), San Antonio, TX. Department of Defense
PharmacoEconomic Center. 2004.
64 For more information on DERP, see Oregon Health Science University, “Drug
Effectiveness Review Project;” available at [http://www.ohsu.edu/drugeffectiveness/
reports/final.cfm]. See also Mark Gibson and John Santa, “The Drug Effectiveness Review
Project: An Important Step Forward,” Health Affairs, vol. 26 (June 6, 2006), pp. w272-
w275. Also see Peter J. Neumann, “Emerging Lessons From the Drug Effectiveness Review
Project,” Health Affairs vol. 25, June 2006, pp. w262-w271.
65 Information from a telephone conversation with John Santa, medical director of DERP at
the Center for Evidence-based Policy at OHSU.
66 The DERP communication, conflict of interest, oversight, and decision-making policies
are available at [http://www.ohsu.edu/drugeffectiveness/process/index.htm], accessed
August 7, 2007.
67 According to John Santa, medical director of DERP, the 30 drug classes with completed
reviews represent 70%-80% of Medicaid prescription drug expenses.

manufacturers is disclosed on request to any interested party.68 DERP also draws
upon information from the published and unpublished scientific literature. DERP
does not conduct new comparative effectiveness studies and only uses existing
information. The possible outcomes of a DERP report are (1) no evidence of
differences between drugs, (2) some differences under some circumstances, (3)
unclear whether drugs differ, and (4) significant differences between drugs.69 The
final reports do not make coverage, payment, or formulary recommendations.
Rather, state decision making groups in the funding Medicaid programs use the
DERP reports to help reach conclusions about coverage, payment, and formulary
status; notably, states may not necessarily reach the same conclusion after reviewing
the same DERP report.70 All DERP reports are available for free on the website.71
As of August 2007, 13 states (plus the Canadian Agency for Drugs and Technologies
in Health) were participating in and financially supporting DERP, which has
produced more than 30 reports since October 1, 2003.72
ECRI Institute. Some non-profit organizations, such as ECRI Institute, also
perform health care technology assessments and comparative effectiveness analyses.
The clients of these organizations may range from private insurers to government
agencies. For example, ECRI is one of AHRQ’s EPCs and provides health
technology assessments to the DOD TRICARE program, but also counts the World73
Health Organization, hospitals and private insurers as clients.
For-Profit Firms. Many for-profit firms also perform technology assessments,
including comparative effectiveness, cost-effectiveness, or pharmaceutical outcomes
research, for their clients, such as pharmaceutical manufacturers and health insurers.
Examples of such firms are Hayes Inc., and United Biosource Corporation (formerly
known as MEDTAP). Other firms, such as McKesson’s InterQual, produce clinical
guidelines and decision support criteria for clients.74 Many pharmaceutical and
private health insurance plans also perform technology assessments in-house. Much


68 For more information on the DERP review process, see Mark Gibson and John Santa,
“The Drug Effectiveness Review Project: An Important Step Forward,” Health Affairs, vol.

26 (June 6, 2006), pp. w272-w275.


69 For more information on the DERP review process, see Mark Gibson and John Santa,
“The Drug Effectiveness Review Project: An Important Step Forward,” Health Affairs, vol.

26 (June 6, 2006), pp. w272-w275.


70 Information from a telephone conversation with John Santa, medical director of DERP at
the Center for Evidence-based Policy at OHSU.
71 For examples of summaries by AARP and Consumer Reports, see AARP, “Cost &
Availability;” available at [http://www.aarp.org/health/comparedrugs/], and Consumer
Reports, “Best Buy Drugs;” available at [http://www.crbestbuydrugs.org/aboutus_faqs.
html].
72 For more information, see Drug Effectiveness Review Project, “Description,” available
at [http://www.ohsu.edu/drugeffectiveness/description/index.htm], accessed August 8, 2007.
73 For more information, see AHRQ, “ECRI: Evidence-based Practice Center,” available at
[http://www.ahrq.gov/clinic/epc/ecriepc.htm], accessed August 16, 2007.
74 For more information, see InterQual History, available at [http://www.interqual.com/
IQSite/about/history.aspx], accessed August 28, 2007.

of the information produced by such firms may be considered confidential client
information and would not be available to the public.
Medicare. As dictated by statute, Medicare pays for medically needed and
necessary services provided to elderly and disabled individuals. Fundamental
questions concern what constitutes medically reasonable and necessary care and
under what circumstances should the care be covered by the program? These
determinations happen through two mechanisms: national coverage determinations
(NCDs) and local coverage determinations (LCDs). As the terms imply, NCDs are
coverage determinations that are made by CMS and applied across the nation,
whereas LCDs are coverage determinations made by local contractors for the
Medicare program and applied to limited geographic areas.
An Example of Opposition to Comparative Effectiveness-Based
Reimbursement
In 2003, as part of its outpatient hospital rate-setting process, CMS asserted that
two anti-anemia drugs, Aranesp and Procrit, were “functionally equivalent,” and,
as such, should be paid the same Medicare rate, subject to an appropriate
conversion ratio. Previously, Medicare had established a specific payment rate for
Procrit as a new technology “pass-through.” When the FDA approved Aranesp in
2002, the issue of appropriate payment for these drugs arose. CMS justified the
functional equivalence label under the rationale that “both products use the same
biological mechanism to produce the same clinical result.”75 The agency cited
their authority in Section 1833(t)(2)(E) of the Social Security Act (SSA) to make
an adjustment determined “necessary to ensure equitable payments.”76 The
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(MMA; P.L. 108-173) amended Section 1833(t)(6) of the SSA to prohibit any
additional application of “functional equivalence,” with the exception of cases in
which it had already been applied. As of January 2006, Medicare payments for
Aranesp and Procrit are not based on any determination of “functional
equivalence” and instead are based on the average sales price (ASP) plus 6%,
which is the CMS policy that is generally used for separately payable outpatient
drugs under outpatient prospective payment system.
Medicare has had an uneven history of incorporating the cost-effectiveness of
treatments when establishing coverage determinations. In 1989, the Health Care
Financing Administration (HCFA), the predecessor to CMS, issued a Federal
Register notice proposing that cost-effectiveness information be included as a77
component of Medicare coverage decisions. This was the first time that HCFA had


75 For more information, see CMS, “Fact Sheet: Payment for Epogen, Procrit, and Aranesp
Under The Medicare Outpatient Prospective Payment System (OPPS),” October 31, 2002.
76 For more information, see CMS, “Fact Sheet: Payment for Epogen, Procrit, and Aranesp
Under The Medicare Outpatient Prospective Payment System (OPPS),” October 31, 2002.
77 See Centers for Medicare and Medicaid Services (CMS), “Criteria and Procedures for
(continued...)

ever proposed to include cost-effectiveness as a factor in coverage decisions. The
1989 proposal met substantial opposition by professional and industry groups, and
as a result was never implemented and instead was withdrawn in 1999.78 In 2000,
Medicare issued new guidelines for determination of coverage that included
demonstrable medical benefit and “added value.”79 The medical benefit was to be
determined using “evidence-based medicine,” which weighs the risks and benefits
of a treatment by considering the reliability of the source of the evidence.80 Evidence
could include experimental studies, expert opinion, informal studies, logical
reasoning from biological knowledge, or clinical guidelines. The term “added value”
was defined as adding greater benefit; if two technologies provided equal benefit,
then only the lower cost technology would be covered. Due to opposition to the
notion of “added value,” the 2000 notice of intent for determination of coverage was
withdrawn in 2003 and never implemented.81
Since January 2006, CMS has explicitly excluded treatment costs from its
NCDs.82 In a 2006 coverage guidance, CMS stated “cost effectiveness is not a factor
CMS considers in making national coverage determinations.”83 On the same day,
CMS issued a guidance on technology assessments that included the statement “cost
is not a factor in our review or determination to cover a particular technology.”84


77 (...continued)
Making Medical Services Coverage Decisions that Relate to Health Care Technology, 54
Fed. Reg. 4302, (January 30, 1989). For more information, also see Wilhelmine
Miller,”Value-Based Coverage Policy in the United States and the United Kingdom:
Different Paths to a Common Goal,” National Health Policy Forum, November 29, 2006.
78 For more information, see CMS, “Procedures for Making National Coverage Decisions,”
Federal Register, vol. 64, no. 22 (April 27, 1999).
79 For more information, see CMS, “Criteria for Making Coverage Decisions,” Federal
Register, vol. 65, no. 95 (May 16, 2000).
80 For more information, see Sean R. Tunis and Jeffrey L. Kang, “Improvements in Medicare
Coverage of New Technology,” Health Affairs, 20, no. 5 (September/October 2001), pp.

83-85.


81 For more information, see Sean R. Tunis and Jeffrey L. Kang, “Improvements in Medicare
Coverage of New Technology,” Health Affairs, 20, no. 5 (September/October 2001), pp.
83-85. Also see CMS, “Notice of Revised Process for Making National Coverage
Determinations,” Federal Register, vol. 68, no. 187 (September 26, 2003), pp. 55634-55641.
82 An exception to this is the CMS decision to apply an “inherent reasonableness” payment
policy for services, other than physician services. For more information, see CMS,
“Medicare Program; Application of Inherent Reasonableness Payment Policy to Medicare
Part B Services (Other Than Physician Services),” 42 CFR Part 405, December 13, 2005.
83 The coverage guidance is available at Centers for Medicare and Medicaid Services,
“Guidance for the Public, Industry, and CMS Staff: Factors CMS Considers in Opening a
National Coverage Determination,” April 11, 2006; available at [http://www.cms.hhs.gov/
mcd/ncpc_view_document.asp?id=6], accessed August 10, 2007.
84 The guidance on technology assessments is available at Centers for Medicare and
Medicaid Services, “Guidance for the Public, Industry, and CMS Staff: Factors CMS
Considers in Commissioning External Technology Assessments,” April 11, 2006; available
(continued...)

In June 2006, a chapter in the MedPAC report explored the methodological
advantages and disadvantages of using cost-effectiveness analysis in Medicare.85 The
chapter notes that the results (and conclusions) of cost-effectiveness studies may vary
due to differences in studies’ methods, differences in the clinical characteristics of
patients, and the timing of the study. Moreover, the report noted that some studies’
methods were opaque. The report states that considering the clinical and cost-
effectiveness of treatments might increase the return on society’s investment in health
care, but doing so will be most useful when results are comparable across studies and
treatments.
CMS continues to use the “evidence-based medicine” approach to evaluate a
treatment’s health benefit, and studies from AHRQ’s EPCs may be included as
evidence.86 CMS also is gathering information about the effectiveness of treatments
through its Coverage with Evidence Development (CED) program.87 Under CED,
CMS may cover a treatment with the condition that providers and patients who use
the treatment allow data to be collected about the patient, treatment, and health
outcomes. This information would then be evaluated to ensure that the medical care
is reasonable and necessary. CED may be required for treatments that (1) are in new
drug classes with new mechanisms; (2) may be effective only for subpopulations; (3)
may provide clinical benefit for off-label88 uses; or (4) may have substantial
consequences for treating the wrong patients.
In contrast to NCDs, CMS believes their contractors have the authority to use
cost and cost-effectiveness for LCDs, specifically with regard to “least costly
alternative” policies.89 Least costly alternative policies state that a Medicare


84 (...continued)
at [http://www.cms.hhs.gov/mcd/ncpc_view_document.asp?id=7].
85 For more information on the report, see Medicare Payment Advisory Commission,
“Chapter 10: Medicare’s Use of Clinical and Cost-effectiveness Information,” Report to the
Congress: Increasing the Value of Medicare, June 2006.
86 For an example of an evaluation of the relationship between Medicare coverage and
medical evidence, see Peter J. Neumann et al., “Medicare’s National Coverage Decisions,
1999-2003: Quality of Evidence and Review Times,” Health Affairs, vol. 24, no. 1
(Jan/February 2005), pp. 243-254.
87 For more information, see Sean R. Tunis and Steven D. Pearson, “Coverage Options for
Promising Technologies: Medicare’s ‘Coverage with Evidence Development’,” Health
Affairs, vol. 25, no. 5 (September/October 2006), pp. 1218-1230. See also CMS, “National
Coverage Determinations with Data Collection as a Condition of Coverage: Coverage with
Evidence Development,” July 12, 2006. Available at [http://www.cms.hhs.gov/mcd/
ncpc_view_document.asp?id=8], accessed September 9, 2007.
88 Off-label refers to the use of treatments for a purpose other than one of the indications for
which the product was approved by the FDA.
89 Notably, there are many procedural differences between national coverage determinations
and local coverage determinations, one of which is that local coverage determinations can
be overturned by an administrative law judge. For more information on how local coverage
determinations can be made, and least costly alternative policies,see CRS Report RS22495,
Medicare Durable Medical Equipment: Proposed Payment Changes for Certain Inhalation
(continued...)

contractor will not pay the additional cost of a more expensive item if a clinically
comparable item costs less. Such policies have been proposed for nebulizers used
for respiratory conditions such as asthma, emphysema, and chronic bronchitis, and
implemented for Lupron and Zoladex, treatments for advanced prostate cancer.90
Office of Technology Assessment. Although charged with being a
nonpartisan source of information about scientific and technical issues for the
legislative branch, the analyses of the Congressional Office of Technology91
Assessment (OTA) were, at times, controversial. Part of the reason for the
controversy was its explicit inclusion of costs and cost-effectiveness in health
technology assessments. Another part of the reason for controversy was the work
was perceived by some as not timely enough, duplicative of other agencies, and not92
necessarily useful to public programs. As a result of the controversy, the agency
was disbanded in 1995, 23 years after its inception, as part of budget reductions inth
the 104 Congress. Prior to its disbandment, the OTA was the smallest
Congressional agency, with less than 200 employees and an annual budget of $2293
million. The agency released approximately 50 reports each year.
In creating the agency, great care had been taken to ensure and protect the
agency’s nonpartisanship and scientific integrity. The OTA was governed by the
Technology Assessment Board (TAB), which was composed of six Senators and six
Representatives with equal representation from each party. The TAB appointed the
Director of OTA, for a six-year term, as well as an advisory council of 10 experts,
including the Comptroller General and the Director of the Congressional Research
Service, to advise the Agency. The TAB also reviewed all proposed studies as well
as the final reports prior to release. The agency’s studies did not recommend a single
policy option, but rather laid out different options and projected the possible
consequences of each.
The Chairman of any congressional committee, the TAB, and the Director of
OTA had the authority to request any technology assessment from OTA; the
assessments generally took 1-2 years to complete. Relevant stakeholders and experts
were consulted on the reports to provide a diversity of viewpoints and to help shape


89 (...continued)
Medications, by Paulette C. Morgan.
90 For more information, see the Department of Health and Human Services, Office of
Inspector General, Medicare Reimbursement for Lupron, January 2004, OEI-03-03-00250.
91 For more information about OTA, see Woodrow Wilson School of Public and
International Affairs, “The OTA Legacy,” available at [http://www.wws.princeton.edu/ota/],
accessed August 14, 2007.
92 For a more detailed history of the politics surrounding OTA, see Gregory C. Kunkle,
“New Challenge or the Past Revisited? The Office of Technology Assessment in Historical
Context,” Technology in Society, vol. 17, no. 2 (1995), pp. 175-196. Available at
[http://www.wws.princeton.edu/ota/ns20/nchal_f.html], accessed August 28, 2007.
93 For more information, see Warren E. Leary, “Congress’s Science Agency Prepares to
Close Its Doors,” New York Times, September 24, 1995, p. 26. Available at
[http://www.wws.princeton.edu/ota/ns20/nyt95_f.html], accessed September 5, 2007.

and critique interim reports. Once they were approved by TAB, the final reports
were publicly released.
Oregon Health Plan.94 An objective of the Oregon Basic Health Services Act
of 1989 was to expand the population covered by Medicaid, to all Oregonians with
incomes below 100% of the federal poverty level. The additional costs would be
managed by covering fewer services. In order to expand the program in this manner,
the Oregon Medicaid program was required to receive a federal waiver of Medicaid95
statutes. Even though increasing the income limits for Medicaid eligibility in this
manner is credited with helping to reduce the percentage of uninsured in Oregon
from 18% in 1992 to 11% in 1996, controversy surrounded the Oregon Medicaid
program’s process of selecting which services to cover. The Oregon Health Plan was
the first large-scale public attempt to apply cost-effectiveness analysis to set priorities
for medical services. The struggles of the program had ripple effects on the use of
cost-effectiveness analysis in other settings.
The Act created the Oregon Health Services Commission and charged it with
developing a list that ranked medical services by priority. The program initially used
cost-effectiveness analysis to develop the prioritized list. The value of the health
benefits was determined by assessing (1) Oregonians’ community values of different
treatments in town meetings; (2) Oregonians’ ratings of the desirability of health
states (i.e., health-related quality of life); and (3) medical professionals’ judgment of96
the efficacy of different treatments. The resulting cost-effectiveness ratios were
criticized by some as not being reflective of societal values.97 Critics noted that
capping teeth would have been ranked as a higher priority than life-saving surgery
for appendicitis.98 Some researchers concluded that cost should not be considered
in determining treatment priorities, while others blamed what they saw as
counterintuitive rankings on the methods for measuring benefits.99 As a result of the


94 For a more detailed history in the Oregon Health Plan, see Jonathan Oberlander, “Health
Reform Interrupted: The Unraveling of the Oregon Health Plan,” Health Affairs, vol. 26, no.

1 (2007), pp. w96-w105.


95 This was a Section 1115 Medicaid demonstration project.
96 For more information, see Robert M. Kaplan, “Value Judgment in the Oregon Medicaid
Experiment,” Medical Care, vol. 32, no. 10, pp. 975-988.
97 For more information, see David M. Eddy, “Oregon’s Methods: Did Cost-Effectiveness
Analysis Fail?” JAMA, vol. 266, no. 15 (October 16, 1991), pp. 2135-2141.
98 For more information, see David C. Hadorn, “Setting Health Care Priorities in Oregon:
Cost-Effectiveness Meets the Rule of Rescue,” JAMA, vol. 265, no. 17 (May 1, 1991), pp.

2218-2225.


99 For more information about the methods used for measuring health benefits, see Erik
Nord, “Unjustified Use of the Quality of Well-Being Scale in Priority Setting in Oregon,”
Health Policy, vol. 24 (1993), p. 45-93. See also David M. Eddy, “Oregon’s Methods: Did
Cost-Effectiveness Analysis Fail?” JAMA, vol. 266, no. 15 (October 16, 1991), p. 2135-
2141. For a discussion of why costs should not be included, see David C. Hadorn, “Setting
Health Care Priorities in Oregon: Cost-Effectiveness Meets the Rule of Rescue,” JAMA,
vol. 265, no. 17 (May 1, 1991), p. 2218-2225. See also Erik Nord, et al., “Who Cares About
(continued...)

controversy, the Oregon health commissioners’ re-ranked the treatments, which
resulted in rankings that were not necessarily related to treatments’ relative costs and
benefits, and were perceived to be more subjective.100 The revised list included 709
disease-treatment combinations, and the state Medicaid budget allowed the program
to cover the costs of combinations 1 through 587.
In August 1992, the Department of HHS rejected Oregon’s waiver application
due to concerns about possible discrimination against disabled people through the use
of Oregonians’ ratings of the desirability of health states; these concerns were
supported by an analysis by the Congressional Office of Technology Assessment
(OTA).101 In November 1992, the Oregon Medicaid program submitted a new list
that did not use ratings of health states. As a result, the new list was not based on
cost-effectiveness ratios and instead was perceived by some observers to be more the
result of pressure from advocacy groups and the commissioners’ judgments.102 The
revised plan was approved in March 1993 and implemented in 1994.
The Oregon program’s analysis was very different from many other cost-benefit,
cost-effectiveness, and comparative effectiveness analyses because treatments for
each disease were compared to treatments for entirely different diseases. Most other
cost-benefit and cost-effectiveness analyses compare like-to-like — that is, only
treatments for the same disease are compared to each other. For example, the costs
and benefits of a treatment for colorectal cancer would not typically be compared to


99 (...continued)
Cost? Does Economic Analysis Impose Or Reflect Social Values?” Health Policy, vol. 34
(1995), p. 79-94.
100 For more information, see David M. Eddy, “Oregon’s Methods: Did Cost-Effectiveness
Analysis Fail?” JAMA, vol. 266, no. 15 (October 16, 1991), pp. 2135-2141. For an example
of an analysis of treatments’ net benefit versus ranking, see Robert M. Kaplan, “Value
Judgment in the Oregon Medicaid Experiment,” Medical Care, vol. 32, no. 10, pp. 975-988.
101 For more information about the OTA analysis, see U.S. Congress, Office of Technology
Assessment, Evaluation of the Oregon Medicaid Proposal, OTA-H-531, May 1992.
Available at [http://www.wws.princeton.edu/ota/ns20/pubs_f.html]. Last accessed
September 6, 2007. For another analysis of the intersection between the Oregon Health Plan
and the Americans with Disabilities Act (ADA), see [no authors listed], “The Oregon Health
Care Proposal and the Americans with Disabilities Act,” Harvard Law Review, vol. 106, no.
6 (April 1993), pp. 1296-1313. For a discussion of whether the rankings were biased against
the disabled, see Paul T. Menzel, “Oregon’s Denial: Disabilities and Quality of Life,” The
Hastings Center Report, vol. 22, no. 6 (November 1992), pp. 21-25. See also Alexander
Morgan Capron, “Oregon’s Disability: Principles or Politics?” The Hastings Center Report,
vol. 22, no. 6 (November 1992), pp. 18-20.
102 For more information, see Robert M. Kaplan, “Value Judgment in the Oregon Medicaid
Experiment,” Medical Care, vol. 32, no. 10, pp. 975-988. Also see James F. Blumstein,
“The Oregon Experiment: The Role of Cost-Benefit Analysis In the Allocation of Medicaid
Funds,” Social Science and Medicine, vol. 45, no. 4, August 1997, pp. 545-554. See also
Tammy O. Tengs et al., “Oregon’s Medicaid Ranking and Cost-Effectiveness: Is There Any
Relationship?” Medical Decision Making, vol. 16, no. 2, April-June 1996, p. 99-107. For
an example of a discussion of the ethics of the Oregon experience, see Norman Daniels, “Is
the Oregon Rationing Plan Fair?” JAMA, vol. 265, no. 17 (May 1, 1991), pp. 2232-2235.

a treatment for heart disease, but the Oregon program explicitly compared treatments
in this manner.
U.S. Preventive Services Task Force. The U.S. Preventive Services Task
Force (USPSTF) was established in 1984 as an independent federal advisory
committee, under the U.S. Public Health Service, and given the responsibility of103
developing clinical practice guidelines for primary care physicians. The USPSTF
took what was perceived to be a novel approach at the time by basing the guidelines
upon quality and strength of clinical evidence, rather than simply “expert consensus.”
The task force published its first set of guidelines in 1989, and was reconvened in
1990 and 1998, the latter of which incorporated cost-effectiveness analysis in its
reviews104 and was financially supported by AHRQ. The USPSTF has also
sponsored some cost-effectiveness studies to better inform the USPSTF clinical
practice guidelines.105 The guidelines, in general, focus on the prevention of diseases,
and compare the preventative methods. They do not explicitly compare different
drugs or technologies, but rather they compare screening to taking preventative
medications to surgical options for a disease.
Veterans Health Administration. The Pharmacy Benefits Management
Strategic Healthcare Group (PBMSHG) was established within the Veterans Health
Administration (VHA) in 1995 to improve the health status of veterans by
encouraging the appropriate use of medications.106 To this end, the group compares
and publishes analyses of the effectiveness of drugs in the same class, produces
clinical practice guidelines, and drug monographs, in addition to establishing the
Department of Veterans Affairs’ (VA) formulary, drug pricing, and contracts.107
Twenty-five drug class reviews were available on the group’s website.108 However,
the group does not publish the guidelines that are used in the internally generated
economic assessments.


103 For more information, see Steven H. Woolf and David Atkins, “The Evolving Role of
Prevention in Health Care: Contributions of the U.S. Preventive Services Task Force,”
American Journal of Preventive Medicine20, suppl. 3 (2001), pp.13-20. See also AHRQ,
“CERTs Overview,” available at [http://www.ahrq.gov/clinic/certsovr.htm], accessed
August 15, 2007.
104 For more information on the 1998 USPSTF, see Eileen Salinsky, “Clinical Preventive
Services: When Is the Juice Worth the Squeeze?” National Health Policy Forum, Issue
Brief No. 806, August 24, 2005, available at [http://www.nhpf.org/pdfs_ib/IB806_
ClinicalPrevServices_08-24-05.pdf]. A list of services recommended by the USPSTF is
available in the appendix of the issue brief.
105 Ibid.
106 For more information, see the Department of Veterans Affairs Pharmacy Benefits
Management Strategic Healthcare Group available at [http://www.pbm.va.gov/default.aspx],
accessed August 15, 2007.
107 For more information, see the Veterans Affairs Pharmacy Benefits Management Strategic
Healthcare Group available at [http://www.pbm.va.gov/DrugClassReviews.aspx], accessed
August 15, 2007.
108 Ibid.

Other Governments’ Initiatives
Australia. The Pharmaceutical Benefits Scheme (PBS) is the Australian health
care system’s program of subsidizing the cost of outpatient prescription medicines
for all Australian citizens who are residents.109 The objective of the PBS is “to
provide timely access to medicines that Australians need, at a cost individuals and
the community can afford.”110 Approximately 80% of all prescription medicines in
Australia are subsidized under the PBS and more than 90% of outpatient drugs.
Drugs may be sold in Australia if they pass the Australian regulatory review, which
is similar to the FDA, but patients pay the full cost of the drugs unless they are listed
on the PBS. The PBS has more than 650 drugs (more than 2500 items) on the
formulary, which includes at least one drug for most medical conditions for which
drug therapy is appropriate. To be included in the formulary, a drug must be
evaluated by the Pharmaceutical Benefits Advisory Committee (PBAC), which is an
independent panel of experts that recommends to the Minister of Health and Ageing
whether a drug should be included. The Pharmaceutical Benefits Pricing Authority
(PBPA) then provides advice to the Minister on negotiating an appropriate price for111
formulary drugs.
The PBAC is required to consider the comparative clinical effectiveness, and
comparative cost-effectiveness of a drug relative to the therapy most likely to be112
replaced in practice, which may be another drug and non-drug therapy. The
existence of one drug on the formulary does not preclude the addition of a similar
drug to the formulary; the number of drugs available to treat a particular condition
is not limited. A positive recommendation from PBAC is a necessary but not a
sufficient condition for inclusion on the formulary. In other words, the Minister can
only add drugs to the formulary that have received a positive recommendation but
not all drugs that receive a positive recommendation are automatically added. The
only circumstance in which a Minister has exercised the right to not add a positively
recommended drug occurred in 2002 when the Minister elected to not include
Viagra.113 This decision was reportedly made due to concern about the impact of
erectile dysfunction treatments on the PBS budget. Accordingly, the Minister
simultaneously removed Caverject, the only drug at the time that was included on the
PBS for the treatment of impotence.


109 For more information, see Medicare Australia at [http://www.medicare.gov.au/
yourhealth/our_services/apbs.shtml], accessed August 15, 2007.
110 Australian Pharmaceutical Advisory Council. National Medicines Policy. Canberra:
Commonwealth Department of Health and Aged Care, 1999.
111 Drugs with acceptable cost-effectiveness ratios are generally recommended for listing at
the price selected by the manufacturer.
112 For more information, see Australia Commonwealth Department of Health and Ageing,
“2006 Guidelines for the Pharmaceutical Industry on Preparation of Submissions to the
Pharmaceutical Benefits Advisory Committee,” November 2006. Available at
[http://www.health.gov.au/internet/wcms/publishing.nsf/content/pbac_guidelines], accessed
September 10, 2007.
113 For more information, see Australian Government Department of Health and Ageing,
“Government Rejects Viagra Listing on PBS,” press release, February 13, 2002.

To make a submission to the PBAC,114 sponsors (usually pharmaceutical
manufacturers) are required to undertake a literature review, identify relevant trials,
assess the quality of the trials, and aggregate the trial data.115 They are also required
to perform a cost-minimization or cost-effectiveness analysis (which may include
modeled analyses), the selection of which would follow PBAC’s guidelines. The
sponsor selects the initial price of their drug for the economic analysis and nominates
a comparator drug. If PBAC does not agree that the nominated comparator is
appropriate, then it may instruct the sponsor to use a different comparator drug.
The submitted trials may evaluate either the efficacy or effectiveness of the
drug. Head-to-head randomized clinical trials, while preferred, are not mandatory.
If such direct comparisons are not available, sponsors may submit two sets of
randomized trials, or even non-randomized trials, that use the same reference drug.
However, the guidelines note that non-randomized studies often over-estimate the
benefit of an intervention, and “claims about the comparative clinical performance
that are based solely on data from such sources will be treated with some
scepticism.”116 Applicant sponsors are required to demonstrate that differences
between the comparison treatments are statistically significant as well as clinically
important.117
If a drug does not receive a positive recommendation by the PBAC, then the
manufacturer may resubmit the application and provide additional data for the
committee’s consideration. If no additional data are available, the sponsor may seek
an independent review. The independent review may only consider specific issues
in dispute and cannot review the PBAC’s overall recommendation.118
Canada. The Canadian Agency for Drugs and Technologies in Health
(CADTH)119 provides assessments of the effectiveness and efficiency of drugs and


114 Note that this description of process and requirements only applies for brand-name drugs.
115 For more information, see Australia Commonwealth Department of Health and Ageing,
“2006 Guidelines for the Pharmaceutical Industry on Preparation of Submissions to the
Pharmaceutical Benefits Advisory Committee,” November 2006. Available at
[http://www.health.gov.au/internet/wcms/publishing.nsf/content/pbac_guidelines], accessed
September 10, 2007.
116 Ibid, p. 188
117 For more information, see Australia Commonwealth Department of Health and Ageing,
“2006 Guidelines for the Pharmaceutical Industry on Preparation of Submissions to the
Pharmaceutical Benefits Advisory Committee,” November 2006. Available at
[http://www.health.gov.au/internet/wcms/publishing.nsf/content/pbac_guidelines], accessed
September 10, 2007.
118 For more information about independent reviews, see Australian Government,
“Independent Review (PBS).” Available at [http://www.independentreviewpbs.gov.au],
accessed September 10, 2007.
119 The Agency was known as the Canadian Coordinating Office for Health Technology
Assessment (CCOHTA) until April 2006.

health technologies to Canadian health decision makers.120 It is a non-profit
organization that was established by the Canadian government on a trial-basis in
1990; it became a permanent entity in 1993. The agency is funded on an annual basis
by the Canadian government.121
One of CADTH’s programs is the Canadian Expert Drug Advisory Committee
(CEDAC), which makes recommendations to participating122 publicly financed drug
insurance plans regarding inclusion of a new drug in formularies. CEDAC is an
independent advisory committee that is accountable to the CADTH Board of
Directors. Its recommendations are informed by drug evaluations from the Common
Drug Review (CDR), which is an intergovernmental body established in 2003 to
evaluate new chemical entities (NCEs) and drug combinations. A CDR evaluation
includes the safety, clinical efficacy, therapeutic advantages and disadvantages, and
the relative cost-effectiveness of a drug; it does not consider the net cost or budgetary
impact of the drug.
Another of CADTH’s programs is the Canadian Optimal Medication
Prescribing and Utilization Service (COMPUS), which was launched in 2004 and is
charged with identifying and promoting best clinical practices. COMPUS does not
create new guidelines, but rather critiques and rates the evidence of guidelines
produced by others. The most influential factors in determining COMPUS’s research
priorities are variations in practice, affected patient population size, availability of
data on outcomes, and approval by Canadian deputy ministers of health.
United Kingdom. The National Institute for Clinical Excellence (NICE) was
established in April 1999 and expanded its responsibilities, to include guidance on
the prevention of ill health and the promotion of good health, and became the
National Institute for Health and Clinical Excellence (NICE) in April 2005.123 Its
mission is to advise health care providers in England and Wales on how to use
resources effectively and deliver the highest quality of care to National Health124
Service (NHS) patients. NICE is an independent organization that is funded by the
Department of Health in England (with contributions from Wales, Scotland, and
Northern Ireland), and accountable to the British Parliament. It was established as
one of several “arm’s-length bodies” within the NHS so as to politically insulate the


120 For more information, see Valerie Paris and Elizabeth Docteur, “Pharmaceutical Pricing
and Reimbursement Policies in Canada,” OECD Working Papers, no. 24 (2006).
121 For more information about CCOHTA and CADTH, see the Canadian Agency for Drugs
and Technologies in Health, “CCOHTA to CADTH: Our History,” available at
[http://www.cadth.ca/index.php/en/cadth/corporate-profile/history], accessed August 26,

2007.


122 All Canadian territories and provinces, except for Quebec, participate.
123 Information based on presentation by Andrea Sutcliffe, Deputy Chief Executive of NICE,
May 21, 2007. See also Peter Littlejohns and Mike Kelly, “ The Changing Face of NICE:
The Same But Different,” Lancet vol. 366, no. 9488 (September 3-9, 2005), pp. 791-794.
124 For more information, see Steven D. Pearson and Michael D. Rawlins, “Quality,
Innovation, and Value for Money: NICE and the British National Health Service,” JAMA,
vol. 294, no. 20 (November 2005), pp. 2618-2622.

organization and help to produce intellectually honest, high quality guidance.125 The
total CY2007 budget was £31 million for recurring programs, £4 million for non-
recurring programs, and a separate £3.5 million for guidance on technologies.
Among other types of guidelines, NICE produces guidance on new and existing
technology and treatments based on their clinical and cost-effectiveness, the latter of
which is required to be included. The cost, utilization, uncertainty, and variation in
use of the product are considered to be critical factors in selecting topics for the
guidelines. As of May 2007, NICE had published 119 guidelines for new and
existing technologies and 46 for treatments.126 The guidelines play a large role in
drug cost reimbursement by the NHS, and as such are important to pharmaceutical
manufacturers. For example, some manufacturers have recently cut the price of their
products due to concern about potentially negative NICE guidelines.127 Investors and
Wall Street analysts also tend to be concerned about negative NICE guidelines
because of their potential impact on NHS coverage and manufacturers’ revenues.128
NICE does not fund new primary research. Rather, the analysis is produced by
academics who use existing research, gathered through systematic literature reviews,
and statistical modeling to answer the questions poised by NICE. These academics
are affiliated with either universities or professional organizations (Royal Colleges).
Multidiscliplinary committees review the technology and clinical assessments and
consult with relevant stakeholders to produce determinations, guidelines, and public
health guidance. Determinations can be appealed before NICE releases its final
determination guidance directly to the NHS.
The process and methods are publicly available and accessible, and all guidance
is subject to public consultation. Draft recommendations are subject to public
appeals from stakeholders. The evidence on which the recommendations are made
is publicly available, with the exception of companies’ confidential information.
NHS managers are expected to fund the mandatory implementation of technology
appraisals no later than three months after the guidance is issued. It is recognized
that the implementation of other types of guidelines may take longer than three
months due to their greater scope.
The cost-effectiveness analysis includes only the costs from the perspective of
the public decision maker, and the comparison treatment is the most commonly used


125 For more information, see the U.K. Office of Public Sector Information, “The National
Institute for Clinical Excellence (Establishment and Constitution) Order,” Statutory
Instrument 1999 No. 220. Available at [http://www.opsi.gov.uk/si/si1999/19990220.htm],
accessed August 13, 2007.
126 NICE also produces guidance on the safety and efficacy of procedures, as well as
guidance on public health interventions and programs; 216 guidelines on procedures and 5
on public health programs and interventions had been published as of May 2007.
127 For examples and a discussion about the role of comparative effectiveness research in
coverage decisions, see Jonathan Gardner, “Comparative Effectiveness Information: Would
the U.S. Use It In a NICE Way?” Health Affairs Blog, June 12, 2007.
128 For example, see Jacob Goldstein, “U.K. Gov’t Could Stop Paying For Drug-Coated
Stents,” The Wall Street Journal, August 27, 2007.

alternative treatment. The analyses segment the patient populations by the value and
clinical benefit added by the drug. As a result, the majority of the guidelines state
whether a technology or treatment is effective, and specify the population in which
the product is most cost-effective.
NICE does not account for the budget impact or affordability of a new
technology.129 Some researchers disagree with this separation and feel that NICE
should prioritize its guidance within a fixed budget, or use some other method that
helps contain NHS costs.130 Researchers and policymakers have also disagreed about
the role cost-effectiveness should play in the NICE appraisal process.131


129 For more information, see Steven D. Pearson and Michael D. Rawlins, “Quality,
Innovation, and Value for Money: NICE and the British National Health Service,” JAMA,
vol. 294, no. 20 (November 23/30, 2005), pp. 2618-2622.
130 For more information, see Richard Cookson, David McDaid, and Alan Maynard, “Wrong
SIGN, NICE Mess: Is National Guidance Distorting Allocation of Resources?” British
Medical Journal, vol. 323 (September 29, 2001), p. 743-745. See also Alan Maynard,
Karen Bloor, and Nick Freemantle, “Challenges for the National Institute for Clinical
Excellence,” British Medical Journal, vol. 329 (July 24, 2004), p. 227-229. Also see
Anthony Culyer, et al., “Searching for A Threshold, Not Setting One: The Role of the
National Institute for Health and Clinical Excellence,” Journal of Health Services Research
& Policy, vol. 12, no. 1 (January 2007), pp. 56-58.
131 For more information, see Iestyn Williams, Stirling Bryan, and Shirley McIver, “How
Should Cost-effectiveness Analysis Be Used in Health Technology Coverage Decisions?
Evidence From the National Institute for Health and Clinical Excellence Approach,” Journal
of Health Services Research and Policy, vol. 12, no. 2 (2007), pp. 73-79.

CRS-41
Table 5. List of Bills Introduced in the 110th Congress to Conduct Comparative Clinical Effectiveness Research
CongressmanComparative Effectiveness Research the
Date Bill IntroducedBill NameBill NumberIntroducing BillPrimary Purpose of the Bill?
Medicare Prescription Drug PriceS. 3Sen. Harry Reid No
Negotiation Act of 2007(D-NV)
Healthy Americans ActS. 334Sen. Ron Wyden (D-No
OR)
Rep. Brian Baird (D-
iki/CRS-RL34208 24, 2007H.R. 3163WA)
g/w
s.orFood and Drug Administration SafetyH.R. 788Rep. John F. Tierney No
leakAct of 2007(D-MA)
://wiki 7, 2007Enhanced Health Care Value for AllAct of 2007H.R. 2184Rep. Tom Allen (D-ME)Yes
http
11, 2007Josephine Butler United States HealthH.R. 3000Rep. Barbara Lee (D-No
Service ActCA)

24, 2007Children’s Health and MedicareH.R. 3162Rep. John D. DingellNo


Protection Act of 2007 (D-MI)

CRS-42
e Effectiveness Research in Bills Introduced in the 110th Congress to
Conduct Comparative Clinical Effectiveness Research
Bill NameDescription of Bill and Role of Comparative Effectiveness Research
rugStated purpose of the bill: To amend part D of title XVIII of the Social Security Act to provide for fair prescription drug
otiation Act of 2007 prices for Medicare beneficiaries.
Entities instructed to conduct comparative clinical effectiveness research: The Secretary of HHS would develop a list of
studies.
Role of entities with regard to comparative clinical effectiveness research, as described in the bill:
!Prescription drug plans would be required to take relevant comparative clinical effectiveness research into
iki/CRS-RL34208account when developing and reviewing their formularies.
g/w!The Secretary would be required to develop a prioritized list of studies that are needed.
s.or!The Secretary would be required to establish an advisory committee to provide advice on setting priorities
leakfor comparative clinical effectiveness research.


://wiki
http

CRS-43
Bill NameDescription of Bill and Role of Comparative Effectiveness Research
Americans Act Stated purpose of the bill: To provide affordable, guaranteed private health coverage that will make Americans healthier and
can never be taken away.
Entity instructed to conduct comparative clinical effectiveness research: Pharmaceutical and medical device
manufacturers.
Role of entity with regard to comparative clinical effectiveness research, as described in the bill:
!Pharmaceutical manufacturers would not be allowed to take a tax deduction for advertising or promotion
expenses for 3 years after approval of a new drug application (NDA), unless the manufacturer began a
comparative effectiveness study.
!If a pharmaceutical manufacturer were to include evidence of the comparative effectiveness of the drug in
the NDA, then the manufacturer would be entitled to the same 6 month market exclusivity extension from
iki/CRS-RL34208the FDA that the manufacturer would have received for conducting additional studies on the effectiveness of
g/wthe drug in pediatric populations.
s.or!If a device manufacturer were to include evidence of the comparative effectiveness of the device in their
leakapplication for premarket approval (PMA), then the manufacturer would be entitled to a 2 year patent
://wikiextension from the U.S. Patent and Trademark Office.
http!If a device or pharmaceutical manufacturer did not include evidence of the comparative effectiveness of theproduct in the NDA, then the Secretary of HHS would be permitted to require all promotional material for
the drug to include the following disclosure: ‘This drug [device] has not been proven to be more effective
than other drugs on the market for any condition or illness mentioned in this advertisement.’



CRS-44
Bill NameDescription of Bill and Role of Comparative Effectiveness Research
AdministrationStated purpose of the bill: To amend the Federal Food, Drug, and Cosmetic Act.
Act of 2007 Entity instructed to conduct comparative clinical effectiveness research: The Center for Postmarket Evaluation and
Research for Drugs and Biologics — a new center within the FDA that is established by the Act — may instruct
manufacturers of drugs and biologics to conduct the studies.
Role of entity with regard to comparative clinical effectiveness research, as described in the bill:
!The Director of the Center would be permitted to require manufacturers of drugs and biologics to conduct
post-market studies, including comparative clinical effectiveness studies, as a condition for market approval
or any time after the product is approved.
!The Director would be required to review and publish a list of ongoing postmarketing studies, including
comparative clinical effectiveness studies.
iki/CRS-RL34208
g/walue forStated purpose of the bill: To amend the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 to
s.orexpand comparative effectiveness research and to increase funding for such research to improve the value of health care.
leakEntity instructed to conduct comparative clinical effectiveness research:
AHRQ and the Comparative Effectiveness Advisory Board — a new advisory board established by the Act.
://wikiRole of entity with regard to comparative clinical effectiveness research, as described in the bill:
http!The Comparative Effectiveness Advisory Board would be charged with advising, organizing, identifying
priorities, and making recommendations on comparative effectiveness research, and would be required to
submit reports to Congress on its activities.
!In addition to current comparative effectiveness research responsibilities designated in section 1013 of the
MMA, AHRQ would be provided the authority to conduct clinical trials and educate health care providers
about comparative effectiveness information.
!The Act would establish the Health Care Comparative Effectiveness Research Trust Fund for carrying out
comparative clinical effectiveness research. The Fund would receive contributions from the Medicare trust
fund, private health insurance, and self-insured health plans.



CRS-45
Bill NameDescription of Bill and Role of Comparative Effectiveness Research
Stated purpose of the bill: To establish a United States Health Service to provide high quality comprehensive health care for
ervice Act all Americans and to overcome the deficiencies in the present system of health care delivery.
Entity instructed to conduct comparative clinical effectiveness research: The National Institute of Evaluative Clinical
Research — a new institute under the National Health Board, which is established by the Act.
Role of entity with regard to comparative clinical effectiveness research, as described in the bill: The Institute would be
required to identify the most effective methods of prevention, diagnosis, and treatment and assist the National Health Board in
establishing clinical practice guidelines.


iki/CRS-RL34208
g/w
s.or
leak
://wiki
http

CRS-46
Bill NameDescription of Bill and Role of Comparative Effectiveness Research
Stated purpose of the bill: To amend titles XVIII, XIX, and XXI of the Social Security Act to extend and improve the
children’s health insurance program, to improve beneficiary protections under the Medicare, Medicaid, and the CHIP
program, and for other purposes.
Entity instructed to conduct comparative clinical effectiveness research:
The Center for Comparative Effectiveness Research, a new center established within AHRQ and overseen by the Comparative
Effectiveness Research Commission, a new commission established by the Act.
Role of entities with regard to comparative clinical effectiveness research, as described in the bill:
!The Center would be required to conduct, support, synthesize, disseminate, and help incorporate into practice
clinical research and comparative effectiveness research, including the research authorized under section

1013 of the MMA.


iki/CRS-RL34208!The Center would be required to encourage the development of clinical registries and health care data
g/w networks
s.or!The Center would be required to develop methodological standards
leak!The Research Commission would be required to determine national priorities; monitor the research funds;
://wikiidentify, review, and approve credible research methods and standards; support forums to increase
httpstakeholder awareness and feedback; make recommendations for public data access quality and periodicreviews; appoint a clinical perspective advisory panel; review processes of the Center; provide guidance to
health care providers and consumers; recommend strategies for disseminating findings; and submit reports to
Congress.
!The Act would establish the Comparative Effectiveness Research Trust Fund for carrying out comparative
clinical effectiveness research. The Fund would receive contributions from the Medicare Trust Fund, private
health insurance, and self-insured health plans.



Table 7. List of Bills Introduced in the 109th Congress to
Conduct Comparative Clinical Effectiveness Research
Comparative
Effectiveness
CongressmanResearch the
Date BillBillIntroducingPrimary Purpose
IntroducedBill NameNumberBillof the Bill?
Jan. 26,Medical Innovation PrizeRep. Bernard
2005Act of 2005H.R. 417Sanders (I-VT)No
Sen.
Feb. 28,Fair Access to ClinicalChristopher J.
2005Trials (FACT) ActS. 470Dodd (D-CT)No
Rep. Henry A.
June 30,H.R.Waxman (D-

20053196CA)


Food and DrugSen. Charles E.
April 27,Administration Safety ActGrassley (R-
2005of 2005S. 930IA)No
Rep. John F.
Nov. 11,H.R.Tierney (D-

20054429MA)


Sept. 8,Medical AdvertisingH.R.Rep. Sherrod
2005Reform Act3696Brown (D-OH)No
Dec. 15,National Innovation Act ofSen. John
20052005S. 2109Ensign (R-NV) No
Jan. 3,National Innovation Act ofH.R.Rep. Adam B.

200620064654Schiff (D-CA)


Vaccine Safety and PublicRep. Dave
July 25,Confidence Assurance ActH.R.Weldon (R-
2006of 20065887FL)No
July 28,Prescription DrugRep. Tom
2006Comparative EffectivenessH.R.Allen
Act of 20065975(D-ME)Yes



CRS-48
e Effectiveness Research in Bills Introduced in the 109th Congress to
Conduct Comparative Clinical Effectiveness Research
Date Bill IntroducedDescription of Bill and Role of Comparative Effectiveness Research
nnovation Prize Act ofStated purpose of the bill: To provide incentives for investment in research and development for new medicines, to enhance
access to new medicines, and for other purposes.
Entity instructed to conduct comparative clinical effectiveness research: Potential recipients of the Fund for Medical
Innovation Prizes — a new fund established by the Act.
Role of entity with regard to comparative clinical effectiveness research, as described in the bill:
!The Board of Trustees for the Fund for Medical Innovation Prizes would be permitted to use the incremental
iki/CRS-RL34208therapeutic benefit of the innovation (either drug, biological product, or manufacturing process), as
g/wcompared to other existing drugs, products, or processes, as one criteria for selecting recipients and
s.ordetermining prize payments.
leak!The Board is composed of the Administrator of CMS, the Commissioner of FDA, the Director of NIH, and
the Director of the Centers for Disease Control and Prevention (CDC), as well as representatives of the
://wikibusiness sector, private medical research and development sector, and consumer and patient interest groups.
http ActStated purpose of the bill: To amend the Public Health Service Act to establish the scope of information required for the data
bank on clinical trials of drugs, and for other purposes.
Entity instructed to conduct comparative clinical effectiveness research: AHRQ
Role of entity with regard to comparative clinical effectiveness research, as described in the bill:
!The Secretary of HHS would be required to deposit in an account, dedicated to funding comparative clinical
effectiveness under AHRQ, any fines or sanctions received from manufacturers who do not submit required
clinical trial information to the data bank.
!The Director of AHRQ is required to develop a priority list for the comparative effectiveness research,
within six months of the enactment of the Act.



CRS-49
Date Bill IntroducedDescription of Bill and Role of Comparative Effectiveness Research
AdministrationStated purpose of the bill: To amend the Federal Food, Drug, and Cosmetic Act.
Act of 2005Entity instructed to conduct comparative clinical effectiveness research: The Center for Postmarket Evaluation and
Research — a new center within the FDA that is established by the Act — may instruct manufacturers of drugs and biologics
to conduct the studies.
Role of entities with regard to comparative clinical effectiveness research, as described in the bill:
!The Director of the Center would be permitted to require manufacturers of drugs and biologics to conduct
post-market studies, including comparative clinical effectiveness studies, as a condition for market approval
or any time after the product is approved.
!The Director would be required to review and publish a list of ongoing postmarketing studies, including
comparative clinical effectiveness studies.
iki/CRS-RL34208
g/wdvertising ReformStated purpose of the bill: To amend the Federal Food, Drug, and Cosmetic Act to require prior approval by the FDA of
s.ortadvertisements for prescription drugs and restricted medical devices, and for other purposes.
leakEntity instructed to conduct comparative clinical effectiveness research: The Secretary of HHS, acting through the
Commissioner of the FDA.
://wikiRole of entity with regard to comparative clinical effectiveness research, as described in the bill:
http!The Secretary would be required to submit a report proposing inclusion of information concerning
comparative effectiveness and comparative cost-effectiveness of prescription drugs in promotional material.
nnovation Act of 2005Stated purpose of the bill: To provide a national innovation initiative.
Entities instructed to conduct comparative clinical effectiveness research: The Secretary of HHS and the Secretary of
Labor.
Role of entities with regard to comparative clinical effectiveness research, as described in the bill:
!Secretaries would be required to include an assessment of the role “comparative clinical effectiveness
research can play in improving quality, value, and efficiency throughout the United States healthcare
system” within a study and report on catastrophic healthcare.



CRS-50
Date Bill IntroducedDescription of Bill and Role of Comparative Effectiveness Research
and PublicStated purpose of the bill: To direct that vaccine safety monitoring and research focus on active surveillance, researching
ssurance Act ofbiological mechanisms for acute and chronic adverse events following vaccination, developing prevaccination screening
methods within a framework that is free from actual and perceived biases, and developing a vaccine safety research agenda.
Entity instructed to conduct comparative clinical effectiveness research: The Agency for Vaccine Safety Evaluation — a
new agency within the Office of the Secretary of HHS that is established by the Act — may award research grants.
Role of entity with regard to comparative clinical effectiveness research, as described in the bill:
!The Director of Vaccine Safety Evaluation would be permitted to award grants to conduct comparative
effectiveness studies of vaccines if more than one vaccine is licensed for the same disease.
!If one vaccine is determined to be more effective than another for the same disease, then the Director would
be required to make the determination available to the public.
iki/CRS-RL34208
g/wrug ComparativeStated purpose of the bill: To require the AHRQ, in consultation with the Director of the NIH, to conduct research to
s.oreness Act of 2006develop valid scientific evidence regarding comparative clinical effectiveness, outcomes, and appropriateness of prescription
leakdrugs, medical devices, and procedures, and for other purposes.
Entities instructed to conduct comparative clinical effectiveness research:
://wikiAHRQ, the NIH, the FDA, and the Secretary of HHS
httpRole of entities with regard to comparative clinical effectiveness research, as described in the bill:
!AHRQ comparative effectiveness research could include clinical research or systematic reviews.
! AHRQ would be required to give particular consideration to supporting research on high volume, high cost,
and high risk treatments.
!The Secretary of HHS would be required to develop a coordinated plan for comparing drug safety with the
AHRQ, the NIH, and the FDA.
!The Director of AHRQ would be required to submit an annual report on the research progress and results to
Congress and the Directors of several agencies, and make the research results public.
!The Act would authorize $100 million to be appropriated for FY2007 for the purpose of carrying out these
responsibilities.