Health Affairs, 26, no. 3 (2007): 696-703 doi: 10.1377/hlthaff.26.3.696 © 2007 by Project HOPE	New Online   Pay Cuts For Medicare Docs   Access To Care Woes   Public Coverage More Efficient   Empowering Consumers

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Tools & Incentives

Cost-Effectiveness As A Price Control

After a technology is developed, cost-effectiveness analysis can offer an economically sound approach to adoption decisions. Little attention has been paid, however, to the incentives these criteria induce for getting technologies to market in the first place. We argue that technology adoption procedures more fully take into account the key trade-off inherent in research and development: the decreased welfare of current patients as a result of higher prices versus the increased welfare of future patients as a result of the incentives for innovation that such prices provide. Empirical evidence from a case study of HIV/AIDS provides an illustration of our conclusions.

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				American College of Physicians Information on Cost-Effectiveness: An Essential Product of a National Comparative Effectiveness Program Ann Intern Med, June 17, 2008; 148(12): 956 - 961. [Abstract] [Full Text] [PDF]