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April 17, 2013 11:31 AM Do Evidence-Based Metrics Control Drug Costs?

By Aaron Carroll

From Health Affairs, “Compared To US Practice, Evidence-Based Reviews In Europe Appear To Lead To Lower Prices For Some Drugs“:

In Europe drug reimbursement decisions often weigh how new drugs perform relative to those already on the market and how cost-effective they are relative to certain metrics. In the United States such comparative-effectiveness and cost-effectiveness evidence is rarely considered. Which approach allows patients greater access to drugs? In 2000-11 forty-one oncology drugs were approved for use in the United States and thirty-one were approved in Europe. We compared patients’ access to the twenty-nine cancer drugs introduced into the health care systems of the United States and four European countries. Relative to the approach used in the US Medicare program in particular, the European evidence-based approach appears to have led to reduced prices for those drugs deemed worthy of approval and reimbursement. The result is improved affordability for payers and increased access for patients to those drugs that were available. The United States lacks a systematic approach to assessing such evidence in the coverage decision-making process, which may prove inadequate for controlling costs, improving outcomes, and reducing inequities in access to care.

Unfortunately, the paper appears to be gated. But the bottom line is this: It appears that in Europe, the main barriers to access of cancer drugs is market availability and reimbursement, while here in the US under Medicare, the main barrier to access for such drugs is out-of-pocket costs. Let me put that another way. In Europe, cancer drugs that are deemed cost-effective are more affordable, but fewer drugs are available overall. In the United States, on the other hand, more cancer drugs are available and covered by Medicare, but they cost more to everyone.

There are trade-offs here, as there always are. We value choice, while Europe values cost-effectiveness. That’s fine, I suppose. But one of these systems is much, much more prepared to control costs in the future. Can you guess which that is?

@aaronecarroll

[Originally posted at The Incidental Economist]

Aaron Carroll ,MD, is an associate professor of Pediatrics and the associate director of Children’s Health Services Research at Indiana University School of Medicine.