The director of the Congressional Budget Office has said that failure to obtain better value for money from medical treatment could derail the US economy.

Writing in the New England Journal of Medicine, Peter Orszag says that the "long-term fiscal balance of the United States will be determined primarily by the future rate of growth of healthcare costs". He adds: "If costs per enrollee in Medicare and Medicaid continued to grow at the same rate as they have over the past four decades, federal spending on those two programmes alone would increase from about 5% of the gross domestic product today to about 20% by 2050 — roughly the share of the economy now accounted for by the entire federal budget."

He says that one solution might be to generate more information about the relative effectiveness of medical treatments and to enhance the incentives for providers to supply, and consumers to demand, more effective care. "Such an approach would address two shortcomings of the current US health care system. First, relatively little rigorous evidence is available about which treatments work best for which patients or whether the benefits of more expensive therapies warrant their additional costs," Dr Orszaq claimed.
Although estimates vary, some experts believe that less than half of all medical care in the USA is based on or supported by firm evidence of effectiveness. Dr Orszag says that currently, financial incentives for both providers and patients tend to encourage the adoption of more expensive treatments and procedures, "even if evidence of their relative effectiveness is limited".

He also calls for medicines to be better targeted at those patients who would benefit the most from them. "Indeed, the concept of better targeting is inherent in all the options considered here, from enhanced research on treatments to the designing of financial incentives." 

Although drugs accounted for only about 12% of what the USA spent on healthcare in 2003, the cost of drugs has been escalating. Figures released by the Department of Health & Human Services on January 31 show that spending on drugs soared sevenfold from $96 per person in 1980 to $709 in 2003, well ahead of the next highest spender, France, which came in at $572 per person in 2003.
In March this year, PharmaTimes World News reported how some health economists in the US are advocating a "Comparative Effectiveness Board (CEB)", which would review the evidence on how well drugs work and whether they were cost-effective – and in effect, be the US version of NICE, albeit with fewer teeth. By Michael Day