Expanded Private Sector Comparative Effective Research Could Reduce Health Care Spending, According to Kauffman Study

Barbara Pruitt, 816-932-1288, bpruitt@kauffman.org, Kauffman Foundation

(KANSAS CITY, Mo.) March 31, 2011 – Policies that incentivize the private sector to invest in comparative effective research (CER) could reduce the growth rate in U.S. health care spending—while improving the overall quality of care. That's according to a new Kauffman Foundation-funded study by Wharton School professor Scott Harrington, summarized in Knowledge@Wharton, the Wharton School's online business journal.

CER compares alternative methods of preventing, diagnosing, treating, and otherwise managing medical conditions. Although current spending on CER represents a small fraction of U.S. health care spending, the Patient Protection and Affordable Care Act authorized $1.1 billion to fund the expansion of CER in the United States. The study, "Incentivizing Comparative Effectiveness Research," examines the extent to which public investment in CER and related initiatives should be further expanded to improve the efficiency of health care spending, limit cost growth, and reduce projected deficits for Medicare and Medicaid.

This study provides an overview and analysis of public funding of CER and the desirability and feasibility of incentivizing additional CER in the private sector. It explores key impediments to higher private spending on CER, the rationales for increased public investment, the potential benefits and inherent limitations of publicly-funded CER, and the advantages of pursuing a multifaceted approach to increase private sector, entrepreneurial investment in CER.

The study also concludes that particular attention should be given to promoting the open availability of research data on medical treatments and health outcomes and to the possibility of expanding tax incentives to promote decentralized, private investment in CER.