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MEDICAL INNOVATION AT THE CROSSROADS
VOLUME IV
Adopting
New
Medical Technology
Annetine C. Gelijns and Holly V. Dawkins, Editors
Committee on Technological Innovation in Medicine
INSTITUTE OF MEDICINE
NATIONAL ACADEMY PRESS
Washington, D.C. 1994
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NATIONAL ACADEMY PRESS · 2101 Constitution Avenue, N.W. · Washington, D.C. 20418
The Institute of Medicine was chartered in 1970 by the National Academy of Sciences to enlist
distinguished members of the appropriate professions in the examination of policy matters pertaining
to the health of the public. In this the Institute acts under both the Academy's 1863 congressional
charter responsibility to be an advisor to the federal government and its own initiative in identifying
issues of medical care, research, and education. Dr. Kenneth I. Shine is president of the Institute of
Medicine.
The Committee on Technological Innovation in Medicine was established in 1988 by the Institute
of Medicine to design a series of workshops that would (a) provide more fundamental knowledge of
the process by which biomedical research findings are translated into clinical practice and (b) address
opportunities for improving the rationality and efficiency of the process. This volume consists of the
proceedings of the fourth workshop in the series, "Examining Coverage and Adoption Decisions
About Medical Technologies," held in Washington, D.C., on September 18-19, 1992. This workshop
and its proceedings were supported by Abbott Laboratories, JEtna, Blue Cross and Blue Shield Asso-
ciation, the Health Industry Manufacturers Association, the Howard Hu`ghes Medical Institute, and
Pfizer. The opinions and conclusions expressed here are those of the authors and do not necessarily
represent the views of the National Academy of Sciences, any of its constituent parts, or the organiza-
tions providing support.
Library of Congress Cataloging-in-Publication Data
Adopting new medical technology / Committee on Technological
Innovation in Medicine, Institute of Medicine; Annetine C. Gelijns
and Holly V. Dawkins, editors.
p. cm.-(Medical innovation at the crossroads; v. 4)
"Proceedings of the fourth workshop in the series 'Examining
coverage and adoption decisions about medical technologies,' held in
Washington, D.C., on September 18-19, 1992"-T.p. verve.
Includes bibliographical references and index.
ISBN 0-309-05035-9
1. Medical innovations-Congresses. 2. Insurance, Health-United
States-Congresses. 3. Social medicine-United States-Congresses.
4. Health care reform-United States-Congresses. I. Gelijns,
Annetine C. II. Dawkins, Holly V. III. Institute of Medicine (U.S.).
Committee on Technological Innovation in Medicine. IV. Series.
[DNLM: 1. Technology Assessment, Biomedical~ongresses.
2. Diffusion of Innovation~ongresses. 3. Technology, Medical-
economics-United States-congresses. 4. Technology, Medical-
trends-United States~ongresses. 5. Insurance, Health,
Reimbursement-United States-congresses. 6. Health Policy-United
States~ongresses. W1 ME342F v.4 1994 / W 74 A239 1994]
R855.2.A36 1994
610-dc20
DNLM/DLC
for Library of Congress
94-7852
CIP
Copynght 1994 by the National Academy of Sciences. All rights reserved
Printed in the United States of America
The serpent has been a symbol of long life, healing, and knowledge among almost all cultures and
religions since the beginning, of recorded history. The image adopted as a logotype by the Institute of
Medicine is based on a relief carving from ancient Greece, now held at the Staatlichemuseen in Berlin.
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Committee on
Technological Innovation
in Medicine
GERALD D. LAUBACH, Chair, Former President, Pfizer, Inc.
SUSAN BARTLETT FOOTE, Health Advisor, Office of Senator Dave
Durenberger, U.S. Senate
BEN L. HOLMES, Vice President and General Manager, Medical Products
Group, Hewlett-Packard Company
WILLIAM N. HUBBARD, JR., Former President, the Upjohn Company
LUCIAN L. LEAPE, Lecturer on Health Policy, Harvard School of
Public Health
KENNETH L. MELMON, Professor of Medicine and of Pharmacology,
Department of Medicine, Stanford University School of Medicine
H. RICHARD NESSON, President, Brigham and Womens Hospital
UWE E. REINHARDT, James Madison Professor of Political Economy,
Woodrow Wilson School of Public and International Affairs, Princeton
University
NATHAN ROSENBERG, Professor of Economics, Stanford University
MICHAEL R. SOPER, Former National Medical Director, CIGNA
JOHN E. WENNBERG, Professor of Epidemiology, Department of
Community and Family Medicine, Dartmouth Medical School
Project Stay
Program on Technological Innovation in Medicine
ANNETINE C. GELIJNS, Program Director (until February, 1993)
HOLLY V. DAWKINS, Research Assistant
HELEN C. ROGERS, Senior Project Assistant
. . .
zll
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Division of Health Care Services
KARL D. YORDY, Director (until October, 1993)
KATHLEEN N. LOHR, Director (from October, 1993) and Deputy
Director (until October, 1993)
Workshop Organizing Committee
A. MARK FENDRICK, Robert Wood Johnson Clinical Scholar, University of
Pennsylvania
SUSAN BARTLETT FOOTE, Health Legislative Assistant, Office of
Senator Dave Durenberger, U.S. Senate
MICHAEL SOPER, Former National Medical Director, CIGNA
IV
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Acknowledgments
The Committee on Technological Innovation in Medicine wishes to ac-
knowledge the many individuals and organizations who contributed to this vol-
ume. These papers were originally presented at the Institute of Medicine work-
shop, "Examining Coverage and Adoption Decisions About Medical Technolo-
gies" (see appendix A for the agenda). Undoubtedly first among those to be
thanked are the authors of these papers. The committee thanks them profoundly
for the sustained effort and time that went into preparing their presentations and
writing their chapters. It also acknowledges the significant contributions of the
workshop organizing committee and the workshop moderators, discussants, and
participants.
The committee notes with appreciation that support for the workshop or the
proceedings came from several organizations. This volume would not have been
possible without the support of Abbott Laboratories, Aetna, Blue Cross and Blue
Shield Association, the Health Industry Manufacturers Association, the Howard
Hughes Medical Institute, and Pfizer.
The committee would also like to express its gratitude to the Institute of
Medicine staff who facilitated the committee's work. Annetine Gelijns, then
director of the program on technological innovation in medicine and now at the
College of Physicians and Surgeons, Columbia University, was both the concep-
tual and editorial foundation of this volume. Holly Dawkins shepherded the
volume through innumerable drafts and revisions. Helen Rogers was invaluable
as both a keen commentator on substantive aspects and as the logistical maven of
all the committee's undertakings. Finally, the committee is deeply appreciative
of the support of four individuals: Kathleen N. Lohr, director of the Division of
v
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Vl
ACKNOWLEDGMENTS
Health Care Services, Karl D. Yordy, former director of the Division of Health
Care Services, Enriqueta Bond, executive officer of the Institute of- Medicine,
and Kenneth I. Shine, president of the Institute of Medicine.
Gerald D. Laubach
Chair
Committee on Technological
Innovation in Medicine
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Contents
LIST OF TABLES AND FIGURES
LIST OF ABBREVIATIONS
PART I: SETTING THE STAGE
1. INTRODUCTION
. . .
X111
Gerald D. Laubach, Annetine C. Gelijns,
and Holly V. Dawkins 3
2. THE NATURE OF TECHNOLOGICAL CHANGE:
INCENTIVES MATTER!
Burton A. Weisbrod.................................................
3. THE IMPACT OF TECHNOLOGY ASSESSMENT
ON DECISIONS BY HEALTH CARE PROVIDERS
AND PAYERS
Bryan R. Luce and Ruth E. Brown.....................................................
PART II: PROVIDER DECISIONMAKING
4. ROLE OF THE HOSPITAL IN THE ACQUISITION
OF TECHNOLOGY
Gerard F. Anderson and Earl P. Steinberg
v''
49
61
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. ~ ~
V111
5. PHYSICIANS' DECISIONS REGARDING THE
ACQUISITION OF TECHNOLOGY
A. Mark Fendrick and J. Sanford Schwartz ........................
PART III: THIRD PARTY PAYER COVERAGE DECISIONS
6. DECISIONMAKING IN THE HEALTH CARE
FINANCING ADMINISTRATION
Kathleen A. Buto..............................................
7. BLUE CROSS AND BLUE SHIELD ASSOCIATION
INITIATIVES IN TECHNOLOGY ASSESSMENT
Susan Gleeson..............................................................
8. KAISER PERMANENTE'S NEW TECHNOLOGY
COMMITTEE: COVERAGE DECISIONMAKING IN
A GROUP MODEL HEALTH MAINTENANCE
ORGANIZATION
Paul D. Lairson.............................................................................
9. AUTOLOGOUS BONE MARROW TRANSPLANTATION:
A MICROCOSM OF THE U.S. HEALTH CARE SYSTEM
William T. McGivney ........................................................................
10. TECHNOLOGY ASSESSMENT, BENEFIT COVERAGE,
AND THE COURTS
Lee N. Newcomer...............................................................................
PART IV: INCREASING THE RATIONALITY
OF COVERAGE DECISIONMAKING
11. STRENGTHENING THE CONNECTION BETWEEN
EVALUATIVE RESEARCH AND COVERAGE
DECISIONMAKING
~ 1lri~n ~ ~ PUFFS
12. MANUFACTURERS' RESPONSES TO THE INCREASED
DEMAND FOR OUTCOMES RESEARCH
Ann K. M. Marshall .......................................................................
CONTENTS
.............. 71
87
.96
...... 101
109
117
....... 127
.... 152
13. PAYING FOR EVALUATIVE RESEARCH
Alan M. Garber and Douglas K. Owens 172
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CONTENTS
14. HEALTH CARE REFORM: SOME REFLECTIONS
ON TECHNOLOGY
Susan Bartlett Foote ...........................................................................
APPENDIXES
A. WORKSHOP AGENDA
Pi CONTR TTlI JT()R ~
IX
193
.. 203
206
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List of Tables and Figures
TABLES
3-1 Summary of Findings by Type of Organization, 52
13-1 Sponsors of Technology Assessment, 178
13-2 Role of Health Care Organizations, 184
FIGURES
2-1 The state of technology and the incentives to use the technology
determine total expenditures: The short run, 32
2-2 The health care insurance system establishes incentives for the
R&D sector, 32
2-3 The technical capability for delivering health care affects the
form and coverage of the health care insurance system, 32
2-4 The level of health care expenditures affects the demand
for insurance, 33
2-5 The dynamic system of interaction of the health care insurance
system, technological change, and health care expenditures, 33
5-1 Conceptual model of the diffusion of innovation to physicians, 73
11-1 Cumulative meta-analyses of 60 trials of intravenous
thrombolytic agents, 136
Example of a decision tree. Management of a 68-year-old man
with diabetes, peripheral vascular disease, and an infected foot, 139
11-3 Probability estimates of experts in colorectal cancer detection, 140
12-1 The spectrum of technology assessment, 153
11-2
Xl
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List of Abbreviations
ACP
AHCPR
AZT
BCBSA
BDMS
CABG
CEAP
CMDs
CRD
DRG
FDA
GNP
American College of Physicians
Agency for Health Care Policy and Research
zidovudine
Blue Cross and Blue Shield Association
Bureau of Data Management and Strategy of the Health
Care Financing Administration
coronary artery bypass graft
Clinical Efficacy Assessment Project of the American
College of Physicians
carrier medical directors
chronic renal disease
diagnosis-related group
Food and Drug Administration
gross national product
Health Care Financing Administration
HDC-ABMT high dose chemotherapy with autologous bone marrow
transplantation
health maintenance organization
Institute of Medicine
Joint Commission on the Accreditation of Health Care
Organizations
HMO
IOM
JCAHCO
MRI
NCI
NIH
OHTA
. . .
magnetic resonance Imaging
National Cancer Institute
National Institutes of Health
Office of Health Technology Assessment
. . .
X111
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XlV
PET
PORTs
PPOs
PPS
PROs
QALY
R&D
RCT
TEC
:-PA
VA
LIST OF ABBREVIATIONS
positron emission tomography
patient outcomes research teams
preferred provider organizations
prospective payment system
. . .
peer review organizations
quality-adjusted life year
research and development
randomized clinical trial
Technology, Evaluation, and Coverage Program of Blue
Cross and Blue Shield Association
tissue plasminogen activator
Department of Veterans Affairs
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Adopting
New
Medical Technology
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