OBJECTIVES: Driven by rising costs of health care and concern that much of this spending could be reduced without detriment to health, comparative effectiveness research (CER) has been offered as a means to identify what works and does not work in health care.  Little conceptual and empirical efforts have been made, however, to quantitatively assess the impact of CER on health and health care spending.  We interpret CER as infusing publicly subsidized evidence on product quality into health care markets, shifting the relative demand for products in CER studies.  We analyze how these shifts in demand affect health and health care spending, allowing for the possibility that “winners” of CER may be both more demanded by patients and doctors as well as more favorably covered by payers.  We also analyze how CER may either raise or lower overall health when treatments have heterogeneous effects across patients, but payers respond with product-specific coverage policies. METHODS: We calibrate the effects of product-specific coverage policies for a major CER study for antipsychotics, the CATIE trial. RESULTS: We find that such policies would have led to a decrease in overall health and value by inducing some patients to switch away from treatments that were effective for them towards winners of the CER. CONCLUSIONS: Our overall conclusion is that CER may not always have the intended effects when the market responds to the CER and patient specific effects of treatments are present.