This article appeared on Forbes.
Large, and expanding, bureaucracies thwart innovation. And, health care bureaucracies are no different. The U.S. health care bureaucracy is expanding; both dramatically (e.g. the implementation of the Affordable Care Act) and gradually. A recent decision proposed by the Centers for Medicare & Medicaid Services (CMS) exemplifies the dangers to medical innovation and patients represented by the gradual expansion of the health care bureaucracy.
CMS has issued a draft decision that, if it were to become effective, would deny payment for a new FDA-approved PET scan technology. This technology can provide certain patients with earlier more accurate diagnosis for Alzheimer’s versus other forms of dementia.
The FDA is the federal agency officially tasked with protecting public health when it comes to ensuring the safety and efficacy of new drugs and medical devices. To fulfill this mission the FDA imposes a long and arduous process on prospective new medical technologies.
Based on its criteria, the FDA has approved the use of the new PET scan technology for detecting Alzheimer’s and other forms of dementia.
The PET scan technology empowers doctors to more accurately diagnose patients that may be suffering from hard to diagnose forms of dementia. With this more accurate diagnostic tool, doctors are better able to design appropriate treatment plans for patients. Thanks to an earlier diagnosis, the PET scan empowers patients to plan for the disease more effectively and enroll in clinical trials should they choose this option.
Due to the growing federal medical bureaucracy, however, FDA approval of applying PET scans to diagnose Alzheimer’s does not necessarily mean that the process is approved. Instead, CMS is claiming jurisdiction as well.
The consequence is that medical innovations may now require that CMS concur with the FDA’s opinion on safety and efficacy. If CMS does not concur with the FDA, then an entirely new approval process may be necessary. The result is that FDA approved medical devices may still be unavailable to a large share of the public, to the detriment of patients.
Ironically, the review program used by CMS – officially known as the Coverage with Evidence Development (CED) program – was designed to incent medical innovation. More often than not, however, the CED program has been used to obstruct innovation rather than incentivizing it.
With respect to the PET scan technology, CMS decision, if finalized, would require additional clinical trials and data collection to ensure that the new technology meets CMS’ standards.
The PET scans for Alzheimer’s is not the only time that the CED program has been used by CMS to demand “additional data” from new medical technologies. Since the first CED Final Decision Memo was issued in 2004 there have been 17 final CED decisions – instances where CMS has mandated an approval standard that is above and beyond the FDA’s standards.
Out of these 17 decisions, 11 of the innovations have established either a CMS approved trial or registry. While the hope is that the trials will eventually generate enough evidence to obtain CMS’ approval, to date only 1 trial has ever concluded.
The CED program exemplifies the problems created when large federal bureaucracies excessively expand their regulatory power in the health care market. Due to the adverse impact that the CED program is having on medical innovation and patient welfare, both a short-term and a long-term fix are necessary.
In the short-term, CMS should remove the restrictions denying coverage for PET scans that could help detect the early stages of Alzheimer’s or other forms of dementia. Beyond the FDA’s approval, a large number of doctors, the Alzheimer’s Association, and the Society of Nuclear Medicine and Molecular Imaging all support the use of PET scan technology because they believe that some patients can benefit.
In the long-term, the national march away from a patient-centered health care system and toward a bureaucracy-centered health care system needs to be reversed. While systemic reforms are necessary, targeted reforms, such as eliminating the CED program entirely, helps to eliminate barriers that are diminishing medical innovation, increasing health care costs, and lowering health care quality.
* Wayne Winegarden, PhD is a Senior Fellow at the Pacific Research Institute and a Contributing Editor to EconoSTATS at George Mason University.