Congress, Industry Executives Take on Wasteful Healthcare Spending

Some point to "comparative effectiveness research" as a way to cut healthcare costs.

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Largely overshadowed by General Motors' stunning bankruptcy last week, a letter from top healthcare industry executives outlining how they plan to tackle rising healthcare costs arrived at the White House.

The letter itself, promised last month, didn't offer much in the way of specifics. But it does give a new look at one of the central debates in the healthcare reform fight: namely, how to cut wasteful spending.

The White House's leading face on healthcare, Office of Management and Budget Director Peter Orszag, has said in the past that up to 30 percent of the nation's current healthcare costs, or some $700 billion annually, could be eliminated simply by curtailing unnecessary or costly expenditures. At the center of Orszag's plan is what's known as "comparative effectiveness research," scientific studies comparing treatments or devices to determine which ones work better.

The argument for boosting this sort of research, says Sean Tunis, director of the Center for Medical Technology Policy, is that even today "there are a surprising number of gaps in our basic medical knowledge, particularly when comparing drug A vs. drug B or surgery vs. physical therapy." In some cases, a patient may receive surgery when physical therapy would produce the same results or choose an expensive drug that's no more effective than a cheaper one. That's largely because the industry hasn't funded these sorts of studies on a big scale.

And though the stimulus bill's more than $1 billion of funding for comparative studies suggests a hunger for this type of research, there is still sharp disagreement over how aggressive the government should be in using it to make healthcare cheaper.

In their letter to the White House, the drugmaker lobby, Pharmaceutical Research and Manufacturers of America (PhRMA), and the medical device makers' lobby, AdvaMed, say they generally support expanding this research. "We think it could be an important cost saver," says AdvaMed Senior Executive Vice President David Nexon. "In a lot of cases, patients and doctors are kind of flying blind."

And as one PhRMA official says: "There has been a lot of misinformation out there. Frankly, over the past several years in the Senate and more recently in the House, we have been consistent supporters of appropriate approaches to comparative effectiveness research."

"Appropriate," of course, is a slippery word. Drugmakers worry that health insurance providers or government agencies might try to use the studies' findings to tell patients what treatments they can or can't receive, in an effort to cut costs. That's actually the case in the United Kingdom, where the national health provider can deny coverage for drugs it deems not to be cost effective. Such worries, in turn, have led to charges from some conservatives that championing this research is a dangerous first step toward healthcare rationing.

Democrats have heard the complaints. As Senate Finance Chair Max Baucus, a leading figure in the healthcare reform fight, admitted on Tuesday at a forum in Washington, "Comparative effectiveness research is almost constantly mentioned, and it has almost raised as much controversy." He added that he and colleagues had even toyed with alternative phrases in an effort to rebrand it.

But Baucus noted that he does not take the warnings about "rationing" lightly. For lawmakers like him, the challenge is trying to write legislation that promotes these studies without incurring the wrath of drug and device makers and while also protecting patients' options. To do that, both Baucus and House counterparts have drafted bills that would encourage patients to pick cheaper treatments but also protect their option to choose costlier ones. Baucus says he intends to fold his bill into the larger healthcare reform package he's assembling in the Senate Finance committee, which he plans to mark up later this month.

Meantime, behind all the legislative maneuvering, many policymakers are still wondering if the benefits of this research will actually live up to the hype. On Tuesday, Orszag reiterated his argument. "Sometimes we don't know what works," he said. "We need much more information provided to the medical system so doctors and hospitals know what works." But will it add up to hundreds of billions in savings? "It's kind of like the gold miners who went down to their prospects and knew the hills were full of gold," says Tunis. "It all came down in tiny pebbles." With healthcare, there are billions of dollars of savings in those hills, but they might have to come out one procedure at a time.