Moving into the 21st century, the practice of medicine is on the cusp of exciting new territory. Advances in medical and pharmaceutical research, particularly in personalized medicine, promise new cures to diseases that affect millions of Americans.
Now more than ever, Washington should get out of the way of innovation and strive to encourage investment in medical technology. Sadly, the reverse is true. Stringent FDA regulations and nightmare approval processes are sending investors’ dollars to other areas of the economy and forcing medical breakthroughs overseas.
Obamacare changes could cause even further damage. The new law creates the Patient-Centered Outcomes Research Institute to advance and fund research comparative effectiveness research (CER).
CER can be beneficial if used solely to inform doctors and patients to guide decision-making. However, the new law lays the groundwork for bureaucrats to use CER in Medicare to make coverage decisions and otherwise compel physicians to treat patients not according to what is best for the individual but according to what the evidence shows is best in most cases. Tracey Walker of the Managed Healthcare Executive writes that, according to the experts who participated in a recent Avalere Health audio conference:
The investments built in to the [stimulus] and [Obamacare] significantly increase the capacity for the federal government, including Medicare, to generate and use CER in making decisions about what technologies and services should be reimbursed.
Used in this way, CER will end the practice of medicine as we know it.
According to a recent econometric study from researchers at the Center for Medicine in the Public Interest, the effects could extend beyond the care patients receive, negatively impacting the economy and society at large. John A. Vernon, Ph.D., and Robert Goldberg, Ph.D., argue that the productivity gains of investment in medical research make it one of the most effective uses of capital, but “the economic cost of new CER regulations will have a deleterious impact on social welfare.” They explain:
Requirements to conduct and use CER to control rising costs and expand the number of people receiving subsidized health by slowing the development and diffusion of medical innovation could actually increase healthcare spending and have a deleterious effect on human progress.… The underlying assumption of CER is at direct odds with empirical evidence that medical innovation—not regulation—increases life expectancy and reduces the cost of services needed to obtain such gains.
Writes Walker: “Expect changing evidence standards that products and services must meet for coverage and payment.” As CER becomes more entrenched, it will increase the costs of bringing new technology to market by increasing the size and cost of clinical trials, delaying the time it takes to bring a new product to market and decreasing the rate of diffusion of new technologies.
The result will be increased uncertainty and risk of investment in medical and pharmaceutical research. Reduced investment in medical innovation could lead to large reductions in health and longevity and a less productive workforce, which would harm the economy.
Advocates of CER and top-down use of its findings argue that it will “bend the cost curve” in health spending by paying only for what works. In practice, however, it’s much more complicated. According to the researchers, “If CER regulations and policies are advanced and implemented with a blind eye towards their effect on long-run innovation, the socio-economic cost to society could be detrimental.” Before embracing CER as a silver bullet to reverse rising health care costs, the lawmakers and bureaucrats responsible for Obamacare must consider the likely negative effects of its use.
