Beating Around the Bush: Why Americans Don

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Beating Around the Bush Why Americans Dont
Use Cost-Effectiveness Analysis (or do they?)

• Peter J. Neumann
• Tufts-New England Medical Center, Boston, MA

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Overview

• Some historical context
• Understanding the current political climate
• Why dont Americans use CEA (or do they)?
• Looking ahead

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Health insurance cover in US, 2005
Source Health Care Coverage in America
Understanding the issues and proposed solutions.
www.CoverTheUninsured.org/Materials
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Medicare expenditures and income as of U.S. GDP
Source 2006 Annual Report of the Medicare Boards
of Trustees
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A Variation Problem
Dartmouth Atlas of Healthcare
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A bit of history
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A big country
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Were not Canada!
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Understanding the current political climate
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• I just bought a car from a guy that stole my
  girl, but the car dont run, so I figure we got
  an even deal Country Western song

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Why Dont Americans Use Cost-Effectiveness
Analysis?
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Why dont Americans use CEA?

• Mistrust of methods
• Methods vary
• Studies not relevant
• Mistrust of motives
• Legal and regulatory barriers
• Systemic barriers
• Distaste for (explicit) rationing
• We ARE using CEA, just quietly

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CEA in America Key players

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

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Medicare
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Selected cost-effectiveness ratios for
technologies covered by Medicare

• Left-ventricular assist devices 500,000-1.4
  million/QALY
• Lung-volume reduction surgery
  98,000-330,000/QALY
• Implantable cardioverter defibrillators
  30,000-85,000/QALY
• PET for Alzheimers disease Over 500,000/QALY

Source Matchar, 2003 Gillick, 2004
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Cost Effectiveness and Use of Selected
Interventions in the Medicare Population
Health Intervention Cost Effectiveness (2002 / QALY) Implementation in Medicare
Influenza vaccine Cost saving 40-70
Beta blocker after MI Under 10,000 / QALY 85
Cholesterol management, secondary prevention 10,000 to 50,000 / QALY 30
Dialysis for ESRD 50,000 to 100,000 / QALY 90
Lung-vol reduction surgery 100,000 to 300,000 / QALY 5,000 to 100,000 cases per year
Left ventric assist devices Over 500,000 / QALY 5,000 to 100,000 cases per year
PET for Alzheimers disease Over 500,000 / QALY 50,000 cases per year
projection
Source Gillick, 2004 Neumann, 2005
www.hsph.harvard.edu/cearegistry.
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The Medicare Modernization Act

• I dont make jokes. I just watch the
  government and report the facts
• Will Rogers

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MMA (1)

• Rx drug coverage for 40 million
• 0-250, patient pays 100
• 250-2,250, patient pays 25
• 2251-3,600, patient pays 100
• gt3,600, patient pays 5
• Subsidies for low-income elderly and employer
• New coverage for prevention (initial physical
  exam, cardiovascular screen, diabetes screen)
• Medicare prohibited from negotiating drug prices

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MMA (2) Formulary rules

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

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Every formulary must include drugs within each
therapeutic category and class, though not
necessarily all drugs within such categories and
class.
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MMA (3)

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

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Medicaid
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John Kitzhaber
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States Participating in DERP, 2006

• Alaska
• Arkansas
• California
• Idaho
• Kansas
• Michigan
• Minnesota
• Missouri
• Montana

• New York
• North Carolina
• Oregon
• Washington
• Wisconsin
• Wyoming
• CHCF/CALPERS

Source Center for Evidence-Based Policy, OHSU
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AMCP Format
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MCOs and PBMs That Have Adopted AMCPs Format

• The Regence Group
• Premera Blue Cross
• Providence Health Plan
• Group Health Cooperative
• BC/BS of Hawaii (HMSA)
• Blue Shield of California
• Wellpoint
• Cardinal Health
• Health Partners
• Prescription Solutions
• Intermountain Health Care

• Anthem Rx Mgmt
• Argus
• Coventry
• Prime Therapeutics
• M Plan
• Mayo Health Plan
• Caremark
• MedImpact
• ACS State Healthcare
• VA and DOD
• Kaiser Permanente

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Audit of 106 economic analyses 2002-2005
Total AMCP Dossiers submitted in 2002-2005 115
Dossiers including economic information 52 (45)
Total number of distinct health economic analyses among the 52 AMCP dossiers containing economic information (dossiers may contain one or more analyses) 106
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Audit of 106 analyses, detail by year
Year of AMCP dossiers reviewed of AMCP dossiers w/economic information of economic analyses reviewed
2002 38 15 26
2003 31 20 41
2004 34 13 43
2005 12 4 5
Total 115 52 106
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General Description 1
Characteristics Total of Observations Positive result (n)
Statement on form of economic analysis (even if wrong) 106 59 (62)
Discussion about form of economic analysis chosen 106 11 (12)
Form of analysis chosen is a CMA or a costs study 106 48 (51)
Discussion about analysis and parameters selected 106 17 (18)
Statement of viewpoint of analysis 106 38 (40)
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General Description 2
Characteristics Total of Obs. Positive result (n)
Analysis perspective is 3rd party payers 106 89 (91)
Time horizon for costs and benefits stated 106 78 (83)
Time horizon is 2 years or more 106 42 (44)
Discounting if analysis 2 years or longer 44 34 (15)
All assumptions are clearly stated 106 20 (21)
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General Description 3
Characteristics Total of Obs. Positive results (n)
Report of productivity changes 106 13 (14)
Statement of rationale behind choice of comparators 106 41 (43)
Compared product to all relevant comparators 106 37 (39)
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General Description 4
Characteristics Total of Obs. Positive results (n)
Reports quantity of resources separately from prices 106 21 (22)
Reports sensitivity analysis performed 106 43 (46)
Incremental results reported (even if wrong formulas) 106 26 (28)
All conclusions follow from data reported 106 54 (57)
Conclusions accompanied by specific caveats 106 18 (19)
Report mentions that comparators might be superior given changes in assumptions 106 8 (8)
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CEA in America The Critical Importance of Value
Assessment

• Medicare
• Medicaid (The DERP)
• FDA
• Other public payers (VA, DoD)
• The public health establishment (CDC, NiH, AHRQ,
  OMB etc.)
• Private health plans
• Employers
• Consumers

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Looking ahead
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Prospects for CEA
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The view from academia

• Cost-effectiveness analysis has had, at best, a
  troubled youth but it will give way to a
  successful adulthood.
• - Peter Ubel, U of Michigan

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The view from politicians

• Im so miserable without you, its like having
  you here.
• I dont know whether to kill myself or go
  bowling

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7 trends to watch

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