[Ip-health] Rawlins v Gingrich -- innovation and comparative effectiveness

[Aidan Hollis]

The Economist magazine has a debate on the use of comparative
effectiveness between Sir Michael Rawlins, Chairman of NICE, and Newt
Gingrich, former speaker of the US House of Representatives.
http://www.economist.com/debate/days/view/394

The debate relates largely to the effect of comparative effectiveness
research (and its application in cost-effectiveness analysis) on
innovation. Pricing policies should be seen as integrated with IP in
determining the direction of research.

Rawlins points out that "All countries have finite resources and
expenditure on one costly component will inevitably deprive other
people, with other conditions, of cost-effective care. This is an
unavoidable and undeniable fact of life; and some form of rationing is
inevitable in every health-care system that operates within finite
resources (as most do). The issue is how, not whether, to ration
health care....

"To meet the needs of patients and the public, innovators must
therefore provide their products at an affordable cost. If they cannot
do so, it is a failure of the innovative process rather than a failure
of the need to examine the cost-effectiveness of innovations
themselves. Putting it another way, unaffordable innovation is not an
innovation.

"The innovative process, particularly for pharmaceuticals, has become
outrageously and unnecessarily expensive. We live in a time of
unparalleled knowledge and understanding about the biological basis of
many diseases. It is essential that these discoveries benefit the
entire human race rather than just the rich and the powerful. We need
affordable innovation."

Gingrich opposes the use of comparative effectiveness reviews. My
reading of Gingrich's argument for avoiding the use of comparative
effectiveness reviews is that they tend to create uniformity of care,
since experimental, unproven, and innovative approaches will fail to
meet cost-effectiveness thresholds. But without experimentation on
patients, there will be less progress. (see his paragraph 21.)
Offering high payments for unproven techniques is of course one way to
encourage new medical developments. Gingrich proposes that we push on
towards more personalized medicine, and getting a better understanding
of how individuals will likely respond to given treatments (which I
thought was the essence of comparative effectiveness).

Aidan Hollis
Professor of Economics

University of Calgary, 2500 University Dr NW Calgary AB T2N 1N4 Canada
tel: +1 403 220 5861  fax: +1 403 220 5861
email: ahollis@ucalgary.ca
web: http://econ.ucalgary.ca/hollis.htm

Incentives for Global Health
http://www.healthimpactfund.org