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The Official News & Technical Journal Of The International Society For Pharmacoeconomics And Outcomes Research
President's Message

Is There an International Backlash Against Cost-Utility Analysis?

Scott Ramsey, MD, PhD, 2010-2011 ISPOR President and Member and Professor, Fred Hutchinson Cancer Research Center, University of Washington, Seattle, WA, USA
The  health  reform  bill  that  was  passed  in  the United  States  last  year  contained  a  provision to  set  up  an  entity  called  the  Patient  Centered Outcomes Research Institute, or PCORI. PCORI’s purpose, as stated in the law, is as follows:

To assist decision makers by advancing the quality and relevance of evidence concerning the manner in which diseases, disorders, and other health conditions can effectively and appropriately be prevented, diagnosed, treated, monitored, and managed through research and evidence synthesis that considers variations in patient subpopulations, and the dissemination of research findings with respect to the relative health outcomes, clinical effectiveness, and appropriateness of the medical treatments, services, and other items [1].

So far, so good. The entity is a quasi-govern-mental, non-profit organization, and has a board of directors that includes representatives from the public and private sectors [2]. The law stipulates that PCORI will be funded initially through federal subsidy and over time by a mixture of federal funds and a tax on public and private health insurers. By 2014, available funds will be to equal $150 million plus an annual $2 fee per Medicare beneficiary transferred from the Medicare Trust Fund, and an annual $2 fee per-covered-life assessed on private health plans adjusted for health expenditure inflation.

Recently, a rumor is swirling in Washington, D.C. that PCORI’s existence is in doubt; that it will be an early victim of the pressure to reduce federal spending and the deficit. I can’t substantiate that rumor, nor will I comment on what level of funding is needed to address PCORI’s mission.

This rumor has raised another more fundamental question for me: who should pay for pharmaco-economics and outcomes research?

Let’s go through the options. One option that might be brought up in some circles in the United States is that the “market” can determine the right level of spending on outcomes research. Presumably, if “advancing the quality and relevance of evidence” improved patient outcomes, reduced costs, or both, someone in the private sector should be willing to pay for it. There are several problems with this argument. First, there are tremendous barriers to setting up an outcomes research enterprise. Not only must one hire highly trained professional staff, but also information systems and a research infrastructure must be built to support the enterprise. All of this would require tens of millions of dollars, with a payoff that is years away and highly uncertain. Only very large, very stable industries or health delivery systems in the private sector could afford such an investment. Indeed, we see that big pharma and a few delivery systems—Kaiser Permanente and Geisinger Health System, for example—have made this investment. Second, the knowledge that is produced from this research, if it is put in the public domain, will benefit everyone, not just the entity that produced it. If outcomes research is in some ways a public good, then we can expect it to be underproduced relative to demand for such information. Certainly, expert groups have said that the level of outcomes research is tiny compared to the “need” in all countries with modern health delivery systems. As far back as 1983, the Institute of Medicine (IOM) of the National Academy of Sciences formed a committee to plan a private/public sector entity in technology assessment in medical care. Third, while private industries such as the health insurance industry, pharmaceutical and device manufacturers, do produce a lot of outcomes research (some of it very high quality), they are unlikely to fund much of the outcomes research that many experts believe is most needed now. For example, manufac-turers are loath to conduct head-to-head trials against widely used competitor therapies, and of course design studies that have the greatest chance of showing their products in a beneficial light. Health insurers and delivery systems will focus on questions that are of greatest interest to their populations, and in some cases don’t have sufficient patient numbers or resources to address their own priority questions.

These issues argue for public funding of outcomes research. Certainly, the National Institutes of Health and Agency for Healthcare Research and Quality (AHRQ) allocates tens of millions of dollars to outcomes research, but much of this money goes to investigator-initiated projects that are not direct evaluations of clinical care services. While the AHRQ does conduct a modest amount of research for the Center for Medicare and Medicaid Services (CMS), some have raised the concern that public funding of both health care financing and outcomes research constitutes an inherent conflict of interest; that insurers would discourage research that might improve outcomes while raising costs, or that cost containment might become a priority over other goals.

In the end, I think the PCORI model may be the right one. Where those who would benefit most from the research (but are less likely to support it by themselves) are collectively taxed to support a private-public entity with input from multiple stakeholders. But this brings me back to the rumors of PCORI’s demise, and the problem of concentrating the outcomes research enterprise in one entity that is vulnerable to political forces. Indeed, in the United States, we have seen high quality research operations such at the Office of Technology Assessment eliminated and the Agency for Healthcare Research and Quality suffer near death experiences because their research displeased certain members of Congress. Ultimately, I think the answer to this problem is to establish regional outcomes research entities that are funded similar to the PCORI model, but are private not for profit companies, independent of

any particular government agency. As is done for the regional private contractors that CMS funds to administer their insurance program, these contractors would be subject to federal oversight and time-defined renewable contracts that could be given to competing outcomes research groups if they did not perform satisfactorily. Because we know that medical care practice patterns vary widely throughout the United States (and I presume in other countries), regional outcomes research groups could be responsive to needs of the region while still having sufficient numbers to address important issues quickly. Regional PCORI’s might also be able to speed the implementation of research findings locally. In cases where the entire country’s population is needed to address a particular question (e.g., a comparative effectiveness study of competing treatments for an uncommon cancer), intergroup studies could be arranged. The widespread availability of outcomes research talent in the United States and elsewhere (as evidenced by the size of ISPOR), and wide availability of other stakeholders who would play a role in the process makes it very likely that no region would suffer for lack of expertise and input.

I hope the rumors about PCORI are unfounded. More than that however, I hope that governments understand the role that pharmacoeconomics and outcomes research can play in solving our national cost and quality of care crises. Stable and sufficient long term funding is a requirement for that success. IC

1    HR 3590, Signed into Law March 23, 2010.

2 GAO Announces Appointments to New Patient-Centered Outcomes Research Institute (PCORI) Board of Governors WASHINGTON, DC (September 23, 2010). Available from: pcori2010sep23.html. [Accessed January 14, 2011].

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