HEALTH ECONOMICS

Health Econ. 14: 1291–1292 (2005)

Published online in Wiley InterScience (www.interscience.wiley.com).

Book review

Using Cost-Effectiveness Analysis to Improve HealthCare: Opportunities and Barriers, by peter j. neumann.Oxford University Press, Oxford, 2005. No. of pages:224. ISBN 0 19 517186 1.

Neumann’s book is a thorough and very readableinsight into the possible reasons for the wariness of USpublic opinion towards the use of cost-effectivenessanalysis (CEA) and its role in supporting resourceallocation decisions in the (public and private) health-care systems in the USA. Faithful to the title, themanuscript passionately debates the historical andcurrent barriers to the adoption of CEA in the US andoffers several compelling and fresh arguments to addressthis resistance.Following the introduction the book is structured in

ten chapters. It starts by setting the scene, offering anhistorical overview of the evolution (and early promise)of CEA in the USA up to the present day, which ischaracterised by numerous economic evaluation studiesbeing published in US-based clinical journals. Soon thereader wonders why are more and more CEA studiesbeing published in the US and still, no clear consensusexists regarding their role and potential in US healthcaresystems? The question is scrupulously addressed in theremainder of the manuscript.Throughout the book Neumann introduces and

critically appraises the possible explanations for thelow uptake of CEA by US decision makers.Chapter 3 presents the early experience of the

Medicare system, followed by that of managed careorganisations and private insurance sector. Herethe author attempts to identify – using his words –‘the nature of the opposition to CEA’. In the subsequentchapter, Neumann tackles the various justifications thathave been proposed to explain the above resistance,taxonomising them into six (not necessarily mutuallyexclusive) categories. The same chapter goes on toconsider three of these factors in detail: (i) decision-maker’s lack of understanding of the methods and theirapplication; (ii) mistrust of the motives behind the desireto introduce CEA into the modus operandi of the UShealthcare system; (iii) mistrust of methods used byCEA, including the lack of relevance of CEA informa-tion for decision makers, who are also interested in theaffordability of a cost-effective intervention as well as thegeneralisability of the study findings (informationcurrently not provided by the typical CEA study).Chapter 5 is entirely concerned with the next category

of limitation: the ethical, legal, regulatory and politicalconstraints faced by supporters of CEA in a multi-agent

environment populated by organisations such as theMedicare, the Food and Drugs Administration (FDA),Health Maintenance Organisations (HMOs) and theprivate insurance sector. Neumann produces a compel-ling argument outlying the shortcoming of the abovejustifications and attempts to provide alternative ones:the American public’s distaste for limits and its mistrustof the way governments and other organisations woulduse them.These are factors, according to Neumann, that

characterised the Oregon experiment which is consid-ered in Chapter 6 of the book. Here the authorintroduces the rationale underpinning Oregon’s attemptto use a set of cost-effectiveness-based criteria to definethe list of healthcare packages which would be providedby the state-funded Medicaid program. The experimentwas set up to address two related issues: the increasingspending on health care by Oregon and the large numberof citizens that were either underinsured or not insuredat all. Neumann considers the possible political andtechnical problems that gave rise to the failure of theexperiment. The reader is by now ready to return to thequestion of whether CEA is used at all in the US and, ifso, how. Chapter 7 describes how cost-effectivenessreasoning has been gradually (consciously or not)assimilated and used by different US healthcare decisionmakers in their services priorities setting activity.These include the Medicare services with Notice ofProposed Rule-making in 2000, the Medicaid with thedevelopment of the list of ‘preferred’ drugs whichincludes generics as a cost-minimisation measure, orsome managed care plans (e.g. Keiser Permanente). Theinternational experience of the UK, Canada andAustralia with regard to the use of CEA informationto support coverage and reimbursement recommenda-tions is examined in Chapter 8. Neumann presents thereasons that led some countries to adopt the use of cost-effectiveness criteria. These include, for instance, theneed to tackle the increasing financial pressure on thepublic healthcare budget and the desire to address theinequality deriving from the unexplained geographicalvariation in the use of medications in the UK; or theneed to consider the drug’s price as fundamentallylinked to its cost-effectiveness in Australia, wherepremium prices could be accepted for those medicationsthat offer additional benefits compared to the alter-natives.Chapter 9 outlines issues for a future research agenda,

summarising the lessons learned so far. Neumann doesmore than this, by producing advice for two maingroups. The first of these is represented by CEA

Copyright # 2005 John Wiley & Sons, Ltd.

practitioners, for whom the author provides advice ontechnical issues as well as how best to communicate andtranslate research findings in a way that is relevant tothose making decisions (Chapter 10). The second groupis US policy makers and politicians, for whom Neumannhas a rich collection of key messages to help themappreciate the value of cost-effectiveness studies, theinterpretation of the study results, and the need to useCEA more explicitly than it is currently the case in theUS.More effort is needed to ensure that CEA occupies

the place it justifies in the tool set used by policymakers, and this can only be achieved by fosteringresearch collaborations and an open and honest

international debate. Peter Neumann is to be com-mended for his analysis and his contribution to thedebate and the literature in this research area. Hisbook is a well structured and authoritative contributionwhich should be studied by researchers and policymakers alike.Andrea Manca is funded by a Wellcome Trust

Fellowship in Health Services Research.

Andrea Manca

Centre for Health Economics,University of York, UK

DOI: 10.1002/hec.1061

Copyright # 2005 John Wiley & Sons, Ltd. Health Econ. 14: 1291–1292 (2005)

Book Review1292