Cost Effectiveness: A Physician's Perspective

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  • 07/06/2006

Scott Gottlieb’s statement on why the FDA is not going to go down the road of comparing medicines prompted CMPI’s Chairman, Michael Weber, MD — one of the world’s experts on heart failure and hypertension — to submit this post about the trend towards states using cost-effectiveness studies to limit access to certain drugs. Setting aside questions of genetic tests that suggest high response to one drug compared to the one deemed “cost effective” by a bunch of second rate economists engaged in data dredging, Dr. Weber writes about the impact this approach has on the quality of care:

Most patient visits to the doctorâs office result in a prescription being written. Physicians depend heavily on the availability of appropriate drugs, and particularly the flexibility of choice to provide medicines that best fit the needs of individual patients.

For this reason, lists of drugs available to be prescribed - typically called formularies - should include an array of agents that optimize patient care. This selection of drugs can affect local prescribing, as in a typical health plan, or it can have broad-based implications, as in a national or governmental formulary.

Cost-effectiveness as a basis for choosing drugs for a formulary sounds beguiling; it implies a rational process that provides benefits to the patient and value to the healthcare system. But this approach is more complex than it appears.

Consider the two components of cost-effectiveness. Strange as it may seem, cost is hard to figure since it involves not only the price of acquiring drugs, but also â among other things — providing for additional doctor visits, extra tests, and adjustments to other drugs being taken. These all contribute to the overall expense.

Effectiveness is equally hard to define. After all, this is not just a simple measure of drug efficacy, but must also take into account acceptability, tolerability and ease-of-use for patients and doctors. Difficulty in achieving true effectiveness is highlighted by the fact that by 12 months of taking life preserving drugs with proven long-term benefits, only 50% of patients are still refilling their prescriptions.

So, simply put, cost-effectiveness is a term that compounds the inaccuracies of two difficult-to-define variables. When all is said and done, we are dealing with a euphemism that has become popular with government agencies and health insurers. In their jargon, the term cost-effectiveness in essence means that they will usually select drugs for formularies that offer them the best financial deal.

Underlying this selection process is the assumption of so-called class effect: if drugs are similar to each other chemically they should work in similar ways, so why not choose the cheapest? But consider these brief examples of common clinical conditions that argue against this approach.

A class of drugs that is widely used for the common problem of clinical depression is known as the SSRIs. Ever since Prozac, these agents have been widely accepted. Yet there are important differences among the several members of this group in their performance; sometimes clinicians find it necessary to work through three or even four different drugs before finding one that works best for a particular patient. These drugs also differ in their safety profiles, so again it is critical to have a broad selection available.

Commonly used pain killers, NSAIDs like ibuprofen, naproxen, aspirin and celecoxib also - on average - share similar benefits in patients with arthritis or other painful conditions. Even so, individual patients can get different degrees of pain relief from one drug as compared with another. There are also issues of convenience: some drugs can be taken once daily, others need multiple doses. And there are also differences among these agents in safety issues, including their propensity to cause gastrointestinal upsets or ulcers, to raise blood pressure or have other effects that necessitate switching to alternative members of the class. Having choices is imperative.

Consider a broader issue. Suppose, at first sight, there doesnât seem to be much meaningful difference among drugs within a particular class. There is still a compelling argument â old-fashioned competition — for including a variety of these drugs on formularies. Most obviously, manufacturers of rival brands will recognize the need to keep their prices within bounds, thus driving down costs across the class.

But there is an even stronger need to stimulate competition. Look, for instance, at what happened with classes of drugs called ACE inhibitors or angiotensin receptor blockers that are now used for treating hypertension, heart failure and a variety of other life threatening conditions related to the heart, strokes and the kidney. As manufacturers were compelled by competitive needs to demonstrate that their particular products could provide special advantages or differentiation, they undertook a wide variety of innovative clinical trials that created truly major advances in improving the quality and length of lives across a wide spectrum of patients.

Without the breakthroughs fueled by this competition, important new therapeutic indications would have remained undiscovered and we would still be using these drugs in a limited fashion, a tragic loss of opportunity to improve many lives. In fairness, manufacturers could hardly be expected to take the major financial risk of investing in large multi-year clinical trials if they were not able to earn at least some revenues during this prolonged and expensive process.

In the short term, cost-effectiveness as a basis for formulary selection may save money for government agencies and may increase profits for health plans. But for the well-being of many individual patients, as well as for critically needed medical progress, the price of drugs cannot be the only criterion for their availability. We should remember that drugs represent only a small fraction of total health care costs and we should not lose sight of our overall health care objectives when deciding on access to drug products.


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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