TY  - JOUR
AU  - Jena,Anupam
AU  - Philipson,Tomas
TI  - Endogenous Cost-Effectiveness Analysis in Health Care Technology Adoption
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15032
PY  - 2009
Y2  - June 2009
UR  - http://www.nber.org/papers/w15032
L1  - http://www.nber.org/papers/w15032.pdf
N1  - Author contact info:
Anupam Jena
Department of Medicine
Massachusetts General Hospital
55 Fruit Street
Boston, MA 02114
E-Mail: jena.anupam@mgh.harvard.edu

Tomas Philipson
Irving B. Harris Graduate School
of Public Policy Studies
University of Chicago
1155 E. 60th Street
Chicago, IL 60637
Tel: 773/502-7773
E-Mail: t-philipson@uchicago.edu
AB  - Increased health care spending has been argued to be largely due to technological change.  Cost-effectiveness analysis is the main tool used by private and public third-party payers to prioritize adoption of the new technologies responsible for this growth.  However, such analysis by payers invariably reflects prices set by producers rather than resources used to produce treatments.  This implies that the “costs” in cost-effectiveness assessments depend on endogenous markups which are, in turn, influenced by demand factors of patients, doctors, and payers. Reimbursement policy based on endogenous cost-effectiveness levels may therefore bear little relationship to efficient use of scarce medical resources. Using data on technology appraisals in the United Kingdom, we test for conditions under which adoption based on endogenous cost-effectiveness may lead to adoption of more inefficient treatments in terms of resource use.
ER  -