WASHINGTON Biotechnology executives have recently begunoffering concrete suggestions along with their criticisms of health carereform proposals. Specifically, they have proposed that the Agency forHealth Care Policy and Research (AHCPR) a relatively obscure armof the Department of Health and Human Services' (DHHS) PublicHealth Service be expanded in order to conduct cost-effectivenessstudies of new drugs, devices and medical procedures and todisseminate its findings.The industry has objected vigorously to elements in President Clinton'shealth care reform plan, including a proposed Advisory Committee onBreakthrough Drugs to review the prices of new drugs and new powerfor the DHHS Secretary to negotiate rebates and review the prices ofnew drugs. Industry representatives are now arguing that AHCPR, agovernment agency that has authority and expertise in health careissues, would be a more appropriate judge of new medicaltechnologies. But they do not advocate granting AHCPR any powerbeyond that to disseminate information.The hope is that lawmakers' fears about uncontrolled drug costs mightbe allayed if at least one government agency is assigned the task ofsystematically assessing the costs and benefits of health caretechnologies and making that information available to health carebuyers and the public. AHCPR would theoretically evaluate the cost-effectiveness of all types of medical technologies instead of singlingout drugs for scrutiny as the breakthrough drug committee would. Thepharmaceutical and biotechnology industries have pointed out thatdrugs account for only 7 percent of the nation's total health care bill."It's easy to be against everything," said Carl Feldbaum, president ofthe Biotechnology Industry Organization (BIO). "We have to have ananswer when the administration asks us, what are you for?" Accordingto Feldbaum, BIO board members approved the AHCPR idea at ameeting in mid-December.BIO's strategy of presenting lawmakers with a potential solution in asea of problems may play well on Capitol Hill. In the past few months,politicians have been deluged by special interest groups and lobbyistscriticizing every aspect of health care reform. "Members of Congresshave taken note that we are constructive and responsible, and we'regetting a lot farther with them," said Feldbaum.The idea of expanding AHCPR's activities is reasonable, said GailWilensky, senior fellow at Project HOPE in Bethesda, Md., and formerdirector of the Medicare and Medicaid programs at the Health CareFinancing Agency (HCFA). "It's a constructive suggestion," she said."Industry is trying to head off bad outcomes like a breakthrough drugcommittee or giving the FDA new authority to rule on the cost-effectiveness of drugs in addition to reviewing safety and efficacy."Wilensky noted that AHCPR is a credible and independent agency thatis not a payor (like HCFA) nor a licensor (like the FDA) for drugs anddevices. Its status would thus preclude any conflicts of interest. Inaddition, AHCPR has considerable expertise in outcomes research, arelatively new science that many believe will be crucial to any healthcare system in the future.However, she said that medical technology assessment has been "a verysmall portion of AHCPR" and that it has not been a "real high-profileagency." Although it appears on DHHS organizational charts in a boxat the same level as the National Institutes of Health (NIH), AHCPRhas an annual budget of $155 million, about 1.4 percent of the NIH's$11 billion budget."We're relatively new and relatively small," said Eleanor Perfetto, apharmacoepidemiologist in the AHCPR's Center for MedicalEffectiveness Research. In December 1989, AHCPR was formed toreplace the National Center for Health Services Research and HealthCare Technology Assessment (the change was stipulated in the 1989Omnibus Budget Reconciliation Act).AHCPR's mission is to "improve the quality and effectiveness of healthcare, broaden access to services and reduce health care costs." Theagency employs a total of 277 people, but the number of trainedanalysts is considerably smaller, according to Perfetto. For example,Perfetto said that six analysts currently work in AHCPR's technologyassessment division.AHCPR deputy administrator Risa Lavizzo-Mourey said the agencycompleted a full review and issued reports on a total of eight medicaltechnologies last year. She said that while AHCPR has a role to play inestablishing the cost-effectiveness of new technologies, "I'm notadvocating that it necessarily be an expanded role."The current methodology used to establish cost-effectiveness atAHCPR is a review of published literature on comparable technologies,a method which would not work for new agents with little or no trackrecord in medical journals. Another stumbling block to establishing thecost-effectiveness of new medical technologies is that the ratio of costto effectiveness is a moving target over the life of a product, accordingto Wilensky. "Doing cost-effectiveness analyses early in the productcycle may or may not yield accurate data about the mature product,"she said. The result is that products may need to be continuallyreviewed.Perfetto said that AHCPR would need a vast increase in funding andpersonnel to take on the task of systematically reviewing the cost-effectiveness of all new and existing drugs, devices and proceduresused in the health care system. According to Feldbaum, BIO hassuggested that consumers of cost-effectiveness data, such as largehealth care buyers, could partially finance AHCPR through user fees."This (government review of the cost-effectiveness of medicaltechnologies) is going to be an expensive undertaking, and manypeople say it will have to be a collaborative effort among numerousgovernment agencies, all of whom have different areas of expertise,"said Perfetto. In other words, health care reformers may have to spendmoney to figure out how to save it and companies may have to settlefor a complex network of old, familiar bureaucracies reviewing theirproducts instead of a new unfamilar one.Wilensky said that the ultimate solution may be to limit thegovernment's role in cost-effectiveness studies to the establishment ofagreed-upon protocols and guidelines that can insure data is verifiable.She said that universities, the NIH, AHCPR and other entities couldcarry out the actual research and disseminate findings. But companiesmay have to submit to increased public scrutiny in the future."If demonstrating clear cost-effectiveness is going to be the price ofadmission into the new health care system, companies will be forced tomake available information that they may not be too keen to disclose,"said Wilensky.

-- Lisa Piercey Washington Editor

(c) 1997 American Health Consultants. All rights reserved.