Dr. Delos "Toby" Cosgrove
Comparative effectiveness research, one of the key tenets of federal health reform, “seems good on first blush” but will have a chilling effect on medical innovation, Cleveland Clinic CEO Dr. Toby Cosgrove said.
Comparative effectivess research (CER) refers to studying which types of treatment alternatives work best for a certain medical condition. Under health reform, Medicare and health insurance companies will pay a tax that’s expected to generate $500 million annually to support a government-appointed group that will oversee and set guidelines for CER.
Cosgrove fears that CER (as it was structured in federal health reform, at least) is “not good for innovators.” The problem is that if CER determines one treatment or product is the most effective for a certain condition, innovators will have little incentive to embark on the lengthy and expensive process of developing a new treatment for the condition.
Cosgrove made his comments as part of a panel discussion called “Perspectives from the top of the industry” at the Cleveland Clinic Medical Innovations Summit.
A fellow panelist, St. Jude Medical CEO Dan Starks, agreed with Cosgrove, calling CER “a wolf in sheep’s clothing.”
“There’s a role for it if it’s done well,” Starks said. “The risk is unintended consequences.”
Much of the other commentary from the panel — which also featured venture capitalist Harry Rein of Foundation Medical Partners, Xerox CEO Ursula Burns and John Sheets, senior vice president of corporate research at Boston Scientific — sounded like a campaign commercial for Rick Perry or Mitt Romney.
Corporate taxes are too high! The legal system needs tort reform! Government regulation is too burdensome! Give corporations a tax break to repatriate profits!
The rhetoric reached a new level when moderator Maria Bartimoro of CNBC claimed that capitalism “is under attack.”
A member of the next panel, Washington Post reporter Ezra Klein, provided a counterpoint, noting that corporate profits reached record highs in the midst of a recession and the top 1 percent of the country has reaped most of the economic gains of the past decade ’ which would seem to suggest that capitalism is thriving.
By Brandon Glenn MedCity News
Brandon Glenn is the Ohio bureau chief for MedCity News.More posts by Author
In RoseFlorida's comment - The camera needs to be better than its competitors to suceed and be priced such that people see value in the extra costs for it. Pharmaceuticals afre the same. The problem is many products have a lack of evidence showing them to be better than what is being used but are priced at a premium. We would not buy a more expensive camera that was not better, why should health care payers buy more expensive drugs that are not shown to be better? Of course, the costs to develop drugs is huge but so are the rewards for a successful drug. To mitigate the risk, patent protection is offered. If the risk of failure has gone up with CER, maybe it needs to be balanced with better protection for drugs that offer true value.
It is all in the philosophy. If I build a new digital camera and I find that it doesn't perform well enough to knock off an industry standard, I have choices. I can drop the price. I can search for market niches in which my product does perform better. I have a chance to recover some of my investment. The end result is that as a consumer there are many very good choices of digital cameras. Now we want to use a different system for medical treatments. I am expected to invest my money in a risky project. Not only do I have to pay to develop the treatment and test to show that it works, I have to pay even more to show that it is indeed better than what is already out there. Why would I choose this investment area? Oh people might say, this is important, this is human health, not a pleasant hobby. So a business climate is created in which hula hoops and slasher movies are attractive investment opportunities but human health is run considered to be a utility. We know where the money will flow and which areas will have the best products.