Obamacare CER Institute Seen as Threat to Innovation

Published May 31, 2016

While experts continue to debate the coming impact of President Obama’s health care law, one aspect is entering the spotlight: Its impact on health care innovation, particularly the ramifications of the creation of a comparative effectiveness research (CER) institute.

Although designed to encourage the use of effective therapies and discourage ineffective therapies, research at the CER institute is barred from being used in Medicare coverage decisions under the new law. Despite that restriction, the National Institute for Health Care Reform (NIHCR) has issued a policy report warning a CER could stifle private sector innovation.

“By promoting effective therapies, CER stands to increase the rewards and incentives for beneficial innovations in medical care. However, CER could dampen development of new, potentially effective therapies by creating additional hurdles for innovators,” report authors Emily Carrier, Hoangmai H. Pham, and Eugene Rich conclude.

Seen As Stifling Innovation

Critics of government involvement in comparative effectiveness argue it will limit what the private sector is willing to do to develop new products.

“Policy makers can take steps to ensure that CER encourages beneficial innovation by creating a stable, transparent and predictable environment to compare therapies and setting explicit time frames for evaluation that are in sync with the innovation process,” the study authors write. “Policy makers and payers also could ease patient access to promising therapies when relative effectiveness is unknown by extending coverage with evidence development and sharing financial risk with innovators.”

Crowding out Private Spending

Gregory Schneider, head of the consumer driven health care project at the Kansas Policy Institute, points out leading voices in medicine such as Harvard Medical School Dean Jeffery S. Flier and Cleveland Clinic CEO Dr. Toby Cosgrove warn comparative effectiveness research could stifle innovation by over-regulating, hurting innovation in the private sector.

“American health care companies have made improvements to the caliber of care through innovations in pharmaceuticals, technology, and a variety of different ways,” Schneider said. “Obamacare will stifle innovation by removing the incentives to produce new technologies as health care spending by government crowds out the spending by private companies.”

Picking Winners and Losers

Christie Herrera, director of the Health and Human Services Task Force at the American Legislative Exchange Council, explains that CER is “a powerful tool,” but one with risks.

“CER shouldn’t be the deciding factor, since it’s impossible to know how individual patients will respond to a generalized clinical recommendation,” Herrera said. “If used improperly, CER can quickly devolve into the government picking winners and losers in the health industry, which will lead to a chilling effect on research and development.”

Sarah McIntosh, Esq. ([email protected]) is a constitutional scholar writing from Lawrence, Kansas.

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Comparative Effectiveness Research and Innovation: Policy Options to Foster Medical Advances