Comparative Effectiveness vs. Cost Effectiveness

Comparative Effectiveness vs. Cost Effectiveness:

Many supporters of comparative effectiveness research contend that there is little need to confront cost-effectiveness in order to contain costs. Some clinical practices, once subjected to rigorous evaluation, have been found to be of no benefit, if not harmful. Moreover, there is considerable variation in health care expenditures and a weak or even negative association between spending and outcomes, such as mortality at the regional level4 and quality measures at the state level.5 This evidence has been interpreted to mean that cutting back on these putatively useless or harmful services would simultaneously reduce cost and improve health.4,6 In contrast, several cross-sectional studies that have shown positive associations between spending and outcomes have been interpreted to show that more spending leads to better outcomes.7

We question whether these associations — either negative or positive — are being interpreted correctly. An association between higher spending and poorer outcomes does not imply causality. Such negative associations may result if physicians and hospitals in lower-cost areas are more skilled — or if they use resources for more cost-effective services.

Whether additional spending yields improved outcomes depends critically on what the money is spent on. Clinical trials of treatments such as coronary reperfusion in patients with acute myocardial infarction, implantable cardioverter–defibrillator therapy, fusion surgery for spinal stenosis, and new drugs for patients with cancer or the AIDS have established their comparative benefits.8,9,10,11,12,13 Several of the cost-effectiveness ratios for these treatments are well under $100,000 per quality-adjusted life-year (QALY) gained, indicating good value for the money (Table 1).

But cost-effectiveness studies reveal a stunning range of incremental cost per QALY gained, ranging from a negative net cost to millions of dollars per QALY gained.14 Preventive services are no more and no less likely to save money than treatments.15 For example, annual screening for cervical cancer costs about $800,000 more for every life-year gained than does biennial screening.16 Small variations in the mix of utilization across the spectrum of therapeutic, diagnostic, and preventive technologies could produce large geographic variations in overall costs and health outcomes.

As long as there are opportunities to substitute more cost-effective clinical strategies for less cost-effective ones, costs can be lowered without adversely affecting health. But at some point, difficult choices must be made. Should the Medicare program continue to pay for cancer drugs that improve survival by a median of 10 days and have cost-effectiveness ratios of up to $500,000 per QALY added?12,17