Working Paper: NBER ID: w15633
Authors: Anirban Basu; Tomas J. Philipson
Abstract: Public technology assessments in general and Comparative Effectiveness Research (CER) in particular have been justified by offsetting benefits of improving patient health and reducing health care spending. However, little conceptual and empirical understanding exists concerning the quantitative impact of public technology assessments such as CER. This is needed to assess whether CER has benefits that outweighs its investment costs. This paper provides a systematic framework to analyze the impact of CER on health outcomes and medical care spending. We interpret CER to infuse evidence on product quality into the market place declaring product winners and losers. This shifts demand by patients and doctors as well as coverage by third party payers towards the winners of CER studies and away from losers. We trace out the spending and health implications of such responses to evidence on product quality in privately and publicly financed health care markets. We simulate these effects for antipsychotics that are among the largest drug classes of the US Medicaid program and for which CER has been conducted by means of the CATIE trial in 1999. Our main conclusion, from both the conceptual and empirical analysis, is that investments into CER may not always have the intended benefits of lowering spending and improving health outcomes. Because CER may result in higher spending and worse health, it is important to have methods to evaluate quantitatively the impacts of CER investments.
Keywords: comparative effectiveness research; health outcomes; health care spending
JEL Codes: I0; I1; I11; I18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Comparative Effectiveness Research (CER) (O57) | demand shift towards more effective treatments (C22) |
| demand shift towards more effective treatments (C22) | higher overall spending (H59) |
| Comparative Effectiveness Research (CER) (O57) | adverse health outcomes (I14) |
| demand shift (J20) | adverse health outcomes (I14) |
| restricting access to losers (D45) | detrimental health effects (I12) |
| CER identifies winners and losers (D61) | demand shift (J20) |
| Comparative Effectiveness Research (CER) (O57) | treatment demand and coverage (R22) |