Press Release:
For immediate release
Tuesday, June 6, 2006
12:01 a.m. EDT


Christopher Fleming

In Comprehensive Look At Evidence-Based Drug Project, Neumann Says That Reviews Should Consider Cost-Effectiveness

Bethesda, MD -- The Drug Effectiveness Review Project (DERP), a collaboration of fifteen states and two private organizations led by former Oregon governor John Kitzhaber (D), should incorporate cost-effectiveness considerations into its evidence-based reviews of drug classes, Peter Neumann writes in an article published today on the Health Affairs Web site.

“The DERP decision to ignore cost-effectiveness considerations reveals a society still unable to consider economic factors openly in evidence reviews, even in a program led from Oregon, the most willing of all states to push health policy limits,” says Neumann, who directs the Center for Evaluation of Value and Risk in Health at Tufts-New England Medical Center. The DERP’s growing traction outside Oregon stands in marked contrast to the failure of other states to follow the model of the Oregon Health Plan, Kitzhaber’s controversial use of cost-effectiveness analyses to prioritize treatments in his state’s Medicaid program. Neumann says that the DERP helps fill a “relative vacuum left by federal and state governments in synthesizing evidence on drug classes.” 

Neumann’s article is the lead piece of a five-paper Health Affairs package on the DERP. The article and the Perspectives that accompany it survey many of the controversies surrounding the DERP, of which the cost-effectiveness question is just one. For example, Neumann asks, “Should evaluators (and decisionmakers) accept evidence based on surrogate markers,” such as lipid levels for cholesterol drugs, when there are alternative drugs in the same class that have been shown to improve ultimate outcomes? What if the drug with evidence only from surrogate markers is cheaper or has fewer side effects? “A call is often heard for head-to-head [randomized clinical trials] to address such questions,” Neumann notes, but such trials are lengthy and expensive, he adds.

“DERP participants have adopted the convention among many technology assessment organizations to consider clinical evidence on its own merits, without respect to costs,” Neumann says. Given society’s aversion to open consideration of cost-effectiveness, “the separation of economic evidence from clinical evidence is understandable as a political construct,” but “the lack of procedures for considering economic evidence more forthrightly and holistically also creates problems. For one, it likely contributes to some of the frustration and mistrust of efforts like the DERP, because observers assume that costs are considered surreptitiously in reviews, or misused downstream by payers.”

The DERP Omits Cost-Effectiveness Because Of Methodological Uncertainty, Say Project Staffers, But States Consider Costs When They Use DERP Reviews

In a Perspective on Neumann’s article, two DERP staffers say that the program avoids cost-effectiveness analyses because of the “methodological uncertainty” involved in these types of determinations. Mark Gibson, deputy director of the Oregon Health & Science University Center for Evidence-based Policy, and John Santa, the medical director of the DERP, also point out that most states that use the DERP reviews consider cost issues when they apply the reviews in their Medicaid decision-making processes.

Neumann’s article argues for considering “clinical and economic evidence simultaneously,” partly on the grounds that “considering costs after the clinical review tends to focus decisions on a drug’s price rather than its overall value.” Gibson and Santa reply: “Rather than arguing over whether cost should be considered simultaneously or in sequence, a more effective starting point would be to increase the transparency of economic factors within Medicaid and to increase disclosure of research that is now shrouded in claims of proprietary privilege,” so that cost-benefit calculations can be more informed whenever they are made.

In a second Perspective, officials of the drugmaker Pfizer Inc. say that the use of DERP reviews “for making coverage decisions must be done with caution so that individual patients, especially those who differ from the average, are not hurt.” Pfizer’s vice president of U.S. Outcomes Research Newell McElwee and his colleagues warn, “The extrapolation of [evidence-based medicine] to population-based coverage decisions for new technologies is far removed” from EBM’s original purpose of helping physicians make individual treatment decisions. “We believe that payers should be required to measure the impact of formulary restrictions on actual patient outcomes, much the same as the [Food and Drug Administration] requires so-called Phase IV [post-marketing] commitments for pharmaceutical companies,” McElwee and his coauthors say.

Alan Heaton, director of pharmacy for Blue Cross and Blue Shield of Minnesota, asserts that the burden of proof should be on those who oppose any limits on choices within drug classes. “Give us the hard evidence for open formularies,” he demands in his Perspective. Heaton cautions that using evidence-based principles to pick superior products within drug classes risks giving the manufacturers of anointed products unwarranted pricing leverage. “Ironically, pharmaceutical companies spend hundreds of millions of dollars to market product differentiation,” he observes, but “the reality is that 80-90 percent of the population can use one drug, leaving only a small group who cannot tolerate that particular drug and need one or two other choices in a given class.”

Finally, Steve Findlay, managing editor of Consumer Reports Best Buy Drugs, explains that his group’s online project provides consumers with the DERP’s findings alongside price and cost information. The project does not perform cost-benefit analysis, but it does choose “Best Buy” drugs in each class. Best Buy drugs can be medications that cost less than competitors but are equally effective, but they can also be more expensive brand-name drugs that are more effective.

Findlay notes that Consumer Reports Best Buy Drugs’ peer reviewers, generally practicing clinicians, are often extensively involved in choosing Best Buy drugs: “Thus, although the process of choosing the Best Buys is driven in large part by scientific evidence and objective data (including costs), it is also based on subjective judgments and human weighing of the evidence.”

You can read Neumann’s article and the four Perspectives at

Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at


©2006 Project HOPE–The People-to-People Health Foundation, Inc.