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The Pragmatist's Guide to Comparative Effectiveness Research

Author

Listed:
  • Amitabh Chandra
  • Anupam B. Jena
  • Jonathan S. Skinner
Abstract
Following an acrimonious healthcare reform debate involving charges of "death panels," in 2010, Congress explicitly forbade the use of cost-effectiveness analysis in government programs of the Patient Protection and Affordable Care Act. In this context, comparative effectiveness research emerged as an alternative strategy to understand better what works in health care. Put simply, comparative effectiveness research compares the efficacy of two or more diagnostic tests, treatments, or health care delivery methods without any explicit consideration of costs . To economists, the omission of costs from an assessment might seem nonsensical, but we argue that comparative effectiveness research still holds promise. First, it sidesteps one problem facing cost-effectiveness analysis—the widespread political resistance to the idea of using prices in health care. Second, there is little or no evidence on comparative effectiveness for a vast array of treatments: for example, we don't know whether proton-beam therapy, a very expensive treatment for prostate cancer (which requires building a cyclotron and a facility the size of a football field) offers any advantage over conventional approaches. Most drug studies compare new drugs to placebos, rather than "head-to-head" with other drugs on the market, leaving a vacuum as to which drug works best. Finally, the comparative effectiveness research can prove a useful first step even in the absence of cost information if it provides key estimates of treatment effects. After all, such effects are typically expensive to determine and require years or even decades of data. Costs are much easier to measure, and can be appended at a later date as financial Armageddon draws closer.

Suggested Citation

  • Amitabh Chandra & Anupam B. Jena & Jonathan S. Skinner, 2011. "The Pragmatist's Guide to Comparative Effectiveness Research," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 27-46, Spring.
    • Handle: RePEc:aea:jecper:v:25:y:2011:i:2:p:27-46
    Note: DOI: 10.1257/jep.25.2.27
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    References listed on IDEAS

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    1. Bhardwaj, Ramesh, 2015. "Restraining High and Rising Cancer Drug Prices: Need for Accelerating R&D Productivity and Aligning Prices with Value," MPRA Paper 63405, University Library of Munich, Germany.
    2. David H. Howard & Yu-Chu Shen, 2011. "Comparative Effectiveness Research, COURAGE, and Technological Abandonment," NBER Working Papers 17371, National Bureau of Economic Research, Inc.
    3. McCarthy, Ian M., 2016. "Eliminating composite bias in treatment effects estimates: Applications to quality of life assessment," Journal of Health Economics, Elsevier, vol. 50(C), pages 47-58.
    4. Boone, J., 2013. "Does the Market Choose Optimal Health Insurance Coverage," Other publications TiSEM f7691fbf-f770-4714-b1b4-1, Tilburg University, School of Economics and Management.
    5. Amitabh Chandra & Jonathan Skinner, 2012. "Technology Growth and Expenditure Growth in Health Care," Journal of Economic Literature, American Economic Association, vol. 50(3), pages 645-680, September.
    6. Boone, Jan, 2013. "Does the market choose optimal health insurance coverage?," CEPR Discussion Papers 9420, C.E.P.R. Discussion Papers.
    7. Cox, James C. & Sadiraj, Vjollca & Schnier, Kurt E. & Sweeney, John F., 2016. "Higher quality and lower cost from improving hospital discharge decision making," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PB), pages 1-16.
    8. Liran Einav & Amy Finkelstein & Heidi Williams, 2016. "Paying on the Margin for Medical Care: Evidence from Breast Cancer Treatments," American Economic Journal: Economic Policy, American Economic Association, vol. 8(1), pages 52-79, February.
    9. Wu, Bingxiao & David, Guy, 2022. "Information, relative skill, and technology abandonment," Journal of Health Economics, Elsevier, vol. 83(C).
    10. Alica Stubnova Sparling & David W. Martin & Lillian B. Posey, 2017. "An Evaluation of the Proposed Worker Protection Standard with Respect to Pesticide Exposure and Parkinson’s Disease," Working Papers 6, Davidson College, Department of Economics.
    11. Cox, James C. & Sadiraj, Vjollca & Schnier, Kurt E. & Sweeney, John F., 2016. "Higher quality and lower cost from improving hospital discharge decision making," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PB), pages 1-16.
    12. Alica Stubnova Sparling & David W. Martin & Lillian B. Posey, 2016. "An Evaluation of the Proposed Worker Protection Standard with Respect to Pesticide Exposure, and Parkinson’s Disease," Working Papers 16-02, Davidson College, Department of Economics, revised Sep 2016.

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    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems

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