I’m getting pretty nerdy on the health policy front today, since despite all the HIMSS chatter on the blogs, this is the one that most caught my eye this morning:

Comparing Drugs Is ‘Real World’ Demand, New PhRMA Head Says – Health Blog – WSJ.

In short, PhRMA, the lead trade group for the pharmaceutical industry, is notionally supporting (who knows what’s going on in the back rooms) the idea of comparative effectiveness research. Comparative effectiveness, for those who don’t read Health Affairs for fun, is the concept of comparing two treatments on a value basis, and using that information to make reimbursement decisions. It produces results like “on average, this drug will extend life by three months, at low quality, for a total cost of $75,000″. Using that information, the people who pay for healthcare (governments, insurance companies, large employers and so forth) can make what are essentially rationing decisions. Basically, if we only have a certain number of dollars to spend, we should spend it on the treatments that provide the most bang for the buck.

Europeans have been doing this actively for years. It’s why healthcare costs are lower over there, and also why some treatments aren’t available, or are only available to patients in certain age brackets or with other qualifiers. Americans have been traditionally distrustful of CE research. Medicare and FDA legislation, for instance, specifically bar “value” determinations – the CMS can’t generally say no to a new treatment that’s better than the one it replaces, even if the cost increase is substantial and the incremental benefits marginal. But this is changing, and the stimulus bill includes a substantial bolus of money – over $1 billion – to support it.

On the surface, it’s odd to see the drug companies getting behind the concept. After all, they’ve years fighting NICE (the Comparative Effectiveness group in the UK) over reimbursement for various expensive cancer treatments. It may just be that they see the way the wind is blowing. But I think there’s something else to it as well. Let’s think about how the overall cost of care breaks down:

For the full Robert Wood Johnson Foundation report from which I stole that image, click here (warning: PDF!). The take away is that prescription drugs are the smallest part of overall healthcare spending. Now, this is a little misleading, since a lot of pharmaceutical profits are tucked away in the “Hospital Care” segment. But you have to think – the pharmaceutical industry is a handy political target because lots of voters pay for drugs at least partly out of pocket, and for many it can be a real burden. But viewed from a comparative effectiveness standpoint, drug treatments may stand up very well against more intensive interventions, like surgery.

Could be nonsense, of course – and the simple explanation, that they’ve decided not to fight a battle they can’t win – certainly makes sense. But I can’t imagine this hasn’t crossed somebody’s mind down at PhRMA HQ.

Back to Health IT land tomorrow, I promise.