Chapter 4
Effectiveness Research: 
Creating an Environment 
for Change
Until recently, comparative effectiveness was a term that only
surfaced in conversations among health policy specialists, acade-
micians, and other observers of the healthcare marketplace. No
longer. The allocation of $1.1 billion to comparative effectiveness
research (CER) in the American Recovery and Reinvestment Act
(ARRA) of 2009 represented a paradigm shift. It promises to radi-
cally alter the level of government involvement in the way health-
care products and services are developed, delivered, and paid
for. For better or worse, we believe this is a fact.
The United States is a laggard in this arena. Other devel-
oped countries, including Britain, Canada, Germany, Australia,
France, and the Netherlands, have all established infrastruc-
tures to serve the same general purpose, and for the same
reason—they couldn’t afford not to. Rapidly aging populations,
coupled with rapid advances in technology and aggressive
52 ◾  Healthcare at a Turning Point: A Roadmap for Change
commercialization by manufacturers, made continued ad hoc
decision making by providers economically untenable.
That’s where the United States finds itself now. With health-
care expenditures at almost 18% of gross domestic product
our per capita expense is already more than 40%
higher than other developed countries, and to make matters
worse, our outcome metrics lag peers substantially. In this
context, comparative effectiveness has emerged as a part of
the broader challenge of healthcare reform.
Historically, decision making regarding the treatment of
choice in a particular case has been the province of the attend-
ing physician in consultation with the patient. In situations
where the treatment will be paid for by an insurer, which
accounts for the overwhelming majority, the prime consider-
ation has been anticipated clinical effectiveness. It’s been the
physicians role to weigh research and claims made by the man-
ufacturer (subject to Food and Drug Administration [FDA] verifi-
cation) and by academic and government-sponsored research.
Comparative effectiveness, at least as conceptualized in
the ARRA, means more than that. Such research is explicitly
mandated to take clinical effectiveness and (for all practical
purposes) cost into consideration. And although the legislation
implies that research results will be advisory in nature, given
the broader economic context, it’s hard to imagine such an
effort culminating in such an outcome.
We believe a broad range of constituents with a stake in
the healthcare marketplace needs to understand this initiative
and what it’s likely to mean to them.
Drivers of CER
Role of Cost Containment
The most basic impulse behind CER is the desire to control
healthcare costs—an inescapable imperative if CMS’s Medicare
Comparative Effectiveness Research ◾  53
and Medicaid programs are to be saved from insolvency with-
out dramatic tax increases.
The federal government currently spends more than 6.5%
of GDP on healthcare through CMS, an amount that already
exceeds the payroll taxes intended to pay for it. If costs
continue to grow at their current pace, everyone else will
have to pay out of pocket while simultaneously footing the
bill for CMS.
There are a number of additional factors that have increased
the pressure on CMSs budget. Wage growth was relatively slow
in the years preceding the recession. Coupled with sustained
unemployment, we have a smaller base from which to collect
payroll taxes. Ironically, wage growth was slow, in part, because
increasingly expensive medical benefits have displaced wages
in total compensation. Another pressure stems from the fact that
many unemployed have lost their health benefits, increasingly
relying on the government for their care.
This combination of factors is recognized by policymakers
as a long-term threat to the public health insurance system,
and every major review of the status of the system recognizes
the need to reduce costs, and the growth of costs, immediately
and dramatically.
Ideally, policymakers would like to reduce costs without
impacting the quality of healthcare, and CER is seen as one
way to get there. By replacing ineffective treatments and stan-
dards of clinical care with effective ones, or by replacing more
expensive treatments with equally effective, but less expen-
sive ones, the cost of care can be brought down, in the words
of the Congressional Budget Office (CBO), “without adverse
health consequences.
The CBO has consistently pointed to evidence in sup-
port of the idea that there are massive savings to be had by
changing patterns of clinical practice. The evidence for this
comes from several sources. First, other countries have equiv-
alent or better outcomes with much lower costs. Second, an
analysis of Medicare spending showed large variations across

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