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Document Type

Article

Abstract

In an effort to control rising drug costs, some health insurers have begun experimenting with methods to link decisions about coverage to the value added by medicines, including through the use of formal cost-effectiveness analysis (CEA). Increased interest in subjecting new drugs to rigorous economic analysis is a welcome development, as it offers the potential to minimize wasteful spending on drugs whose high prices are not justified by evidence of additional benefits produced. At the same time, CEA raises significant ethical issues, particularly when payers use it to limit access to drugs deemed to provide insufficient value for money. For example, most forms of CEA focus on the absolute quantity of health benefits a drug is expected to produce, without regard to how those benefits will be distributed among individuals or population groups. In addition, the measure of benefits most often used in CEA—the quality-adjusted life year (QALY)—has a built-in bias against life-extending drugs for patients with incurable disabilities as well as for patients with diseases that disproportionately affect racial minorities. As a result of this bias, relying on CEA to limit access to medications could potentially violate federal civil rights laws in some situations. Finally, defining effectiveness solely in terms of direct health benefits to patients ignores other important ways that medicines can provide value, including benefits to third-party caregivers and society at large. Previous scholarship has examined the role of CEA in setting health care priorities, but less attention has been paid to the use of CEA in the context of health insurance. This Article fills that gap by critically exploring the use of CEA in medication coverage decisions, identifying ethical shortcomings in current approaches, and recommending strategies for reforming CEA to retain its benefits and to minimize its negative effects.

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