The Impact of Comparative Effectiveness Research on Health and Health Care Spending

27 Pages Posted: 11 Jan 2010 Last revised: 20 Sep 2010

See all articles by Anirban Basu

Anirban Basu

University of Chicago - Department of Medicine

Tomas Philipson

University of Chicago; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: January 2010


Public technology assessments in general and Comparative Effectiveness Research (CER) in particular have been justified by offsetting benefits of improving patient health and reducing health care spending. However, little conceptual and empirical understanding exists concerning the quantitative impact of public technology assessments such as CER. This is needed to assess whether CER has benefits that outweighs its investment costs. This paper provides a systematic framework to analyze the impact of CER on health outcomes and medical care spending. We interpret CER to infuse evidence on product quality into the market place declaring product winners and losers. This shifts demand by patients and doctors as well as coverage by third party payers towards the winners of CER studies and away from losers. We trace out the spending and health implications of such responses to evidence on product quality in privately and publicly financed health care markets. We simulate these effects for antipsychotics that are among the largest drug classes of the US Medicaid program and for which CER has been conducted by means of the CATIE trial in 1999. Our main conclusion, from both the conceptual and empirical analysis, is that investments into CER may not always have the intended benefits of lowering spending and improving health outcomes. Because CER may result in higher spending and worse health, it is important to have methods to evaluate quantitatively the impacts of CER investments.

Suggested Citation

Basu, Anirban and Philipson, Tomas J., The Impact of Comparative Effectiveness Research on Health and Health Care Spending (January 2010). NBER Working Paper No. w15633. Available at SSRN:

Anirban Basu (Contact Author)

University of Chicago - Department of Medicine ( email )

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Tomas J. Philipson

University of Chicago ( email )

Graduate School of Business
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Chicago, 60637
United States

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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