that the decision includes all relevant factors, not just the cost-effectiveness ratio. The quality-adjusted life-year (QALY) is the most often used metric of effectiveness, which includes both survival and quality of life on the same measurement plane. This can have the effect of emphasizing life-years added, when some treatments may be more focused on reducing side effects, improving quality of life, or increasing productivity, as examples. Recently, recommendations of the National Institute for Health and Clinical Evidence (NICE), which some cite as a model for comparative effectiveness in the United States, to prevent access to medical technologies that are standards of care outside the United Kingdom—have been criticized by patient groups as denying access to treatments for which there are limited or no alternatives and failing to consider the full impact of treatments on patients, caregivers, and society in general.

  • Cost-effectiveness is not well suited to assessing the efficiency of products or markets with dynamic competition involving rapidly changing prices and technological obsolescence: At best, it is a static assessment of average costs for many technologies subject to rapid change. If cost-effectiveness is used to limit access to some products, it may actually keep costs higher for covered products. For medical devices, the rapid iteration of technology, and the potential for increased effectiveness when measured over a longer term, make cost-effectiveness assessments difficult to do.

  • Having cost-effectiveness analysis done at a national level will reduce incentives for innovation: If the result of comparative effectiveness analysis is to limit benefits to “the most effective, lowest-cost option,” this may become “the effective-enough, lowest-cost option.” This is likely to shift industry investment to less risky, incremental innovation, rather than encourage companies to take the considerable financial risk of producing breakthrough treatments. In the United States, we have the potential to develop a comparative effectiveness capability that increases incentives for breakthrough innovation and is better targeted to individuals, while making it less attractive to develop incremental innovation. Cost-effectiveness assessments provided at a national level may signal the opposite.

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