Are the Economics of Complementary and Alternative Medicine Different to Conventional Medicine?

Jean Spinks; Bruce Hollingsworth


Expert Rev Pharmacoeconomics Outcomes Res. 2009;9(1):1-4. 

Complementary and alternative medicine (CAM) is valued by consumers. In Australia, 'out-of-pocket expenditure' is estimated as being as high as AU$4.13 billion (US$3.12 billion) per year.[1] In the USA, estimates have ranged between US$27.0 billion and US$34.4 billion for out-of-pocket expenditure[2] and, in England, out-of-pocket expenditure on six of the most established CAM therapies has been estimated at over GB£450 million.[3] Given the levels of expenditure and the consequent outcome and policy implications, there is now a growing amount of health economics literature in this area.

As with the analysis of other aspects of the healthcare system, a number of different perspectives and methodologies are available for health-economics analysis of CAM use. As research into the economics of CAM is still in its early stages compared with conventional medicine, the analysis is currently limited by the amount and type of available data. However, as social, clinical and economic research into CAM use continues to expand,[4] so, too, do the opportunities for larger-scale data collection and analysis.

The analysis of available administrative data on CAM is an obvious place to start. The majority of CAM use in most countries is funded by private expenditure and, therefore, limited administrative data exist for the estimation of total expenditure on CAM by the community. CAM use may also be subsidized by private health insurers, whose claims data are of potential use in estimating the effect of changes in the utilization rates of CAM, in relation to the type and amount of subsidy of different CAM therapies. Some literature already exists using these data.[5–7] One of the most interesting aspects of using claims data is that they provide some evidence on the utilization patterns of certain CAM therapies for governments who are interested in including CAM on national health subsidy schemes.[8] Certain types of administrative data may also be used to calculate and compare price elasticities of demand for different CAM therapies with those of conventional health services.[9] This is of interest to both private and public health insurers, as well as CAM practitioners, as analysis of this nature demonstrates how price differentials and changes between products can affect relative rates of utilization.

One question that the analysis of administrative data may be able to illuminate is whether CAM is more often used as a substitute for conventional medicine or as a complement.[10] This has important ramifications for the economic evaluation of CAM using cost–effectiveness analyses or similar techniques, as it is important to identify whether the costs associated with CAM should be treated as an addition to conventional medicine or as a cost offset (substitute).[11] Of particular interest are high-prevalence chronic conditions, such as diabetes or cardiovascular disease, for which some evidence already exists that CAM is being used as a complement to conventional medicine, rather than a substitute, by people with these conditions.[12,13]

The relative lack of administrative data may be contrasted with the availability of CAM data on pharmaceutical usage in the community. Large panels of data now exist from a number of sources, including national pharmaceutical subsidy schemes, private health insurers and summaries of the number of units of product sold through wholesalers and manufacturers.[101] Corresponding socioeconomic data are often available for these panels, making it possible to analyze the relationship of these socioeconomic factors with regard to the use of pharmaceuticals.[14,15] Such an analysis has important consequences for the identification of pockets of inequity of access to essential medicines in the community and, therefore, provides potential opportunities to address any inequity and improve the health outcomes of the community as a whole.

More work is required before CAM is likely to be comprehensively included in public health subsidy schemes and for equivalent administrative data to be available through this mechanism. However, it is feasible that these data may become available for analysis through other mechanisms, such as routine data collection by professional bodies as they become more established. One important point to note, from an economic perspective, is that the methodologies used in the analysis of administrative data would appear to be comparable for both pharmaceutical and CAM use, even though the questions may differ.

Other sources of administrative data already exist for CAM in a similar form to those for conventional medicine. Good examples are the national health surveys of a number of countries,[16,17,102] which have already included questions on CAM use, pharmaceutical use and other health-service use, as well as socioeconomic factors. Such surveys are often undertaken regularly, using consistent methodologies, so that cross-sectional results may be compared over time. An interesting question, yet to be answered comprehensively, is whether there is some type of relationship between the use of CAM and conventional medicine for the individuals surveyed. If such a relationship is found to exist, national-level conventional medicine service utilization records may be used to predict CAM use across populations, controlling for socioeconomic factors.

The economic evaluation of conventional medicine is well established.[18] The economic evaluation of pharmaceuticals in particular is heavily reliant on clinical evidence in the form of randomized, controlled trials. Some concerns have been raised as to whether the current use of randomized trials to establish the safety, efficacy and subsequent cost–effectiveness of CAM treatments is appropriate.[19–21] Others have a clearer position; in the UK, the Inquiry into Complementary and Alternative Medicine by a Parliamentary Select Committee provides such an example:

“In our opinion any therapy that makes specific claims for being able to treat specific conditions should have evidence of being able to do this above and beyond the placebo effect”. [103]

The relevance of much of this debate is highly dependent on the perspective being taken. From the point of view of the consumer, most CAM therapies are currently purchased privately as an out-of-pocket expense. There is evidence that this expenditure continues to grow, despite the lack of rigorously conducted randomized trials providing evidence of safety and efficacy upon which consumers can make an informed choice.[22] Some may argue (leaving aside obvious ethical concerns of information imbalance) that if consumers continue to pay for their own choices, whether those choices are well informed or not, is of little consequence to others. However, if you take a public-health perspective, the lack of safety data may impact on the community in the form of increased harms,[23] which are subsequently treated and paid for under subsidized health insurance schemes (either publically or privately). The arguments for not conducting economic evaluations based on sound outcomes evidence is even less convincing from the perspective of a third-party insurer interested in subsidizing CAM therapy, such as a government or private health insurer. Third parties are required to make decisions on how to spend resources and choose between competing ranges of alternatives; therefore, evidence of comparative effectiveness is a vital part of accountability of decision making. It may be argued that the importance of perspective is very similar to that with regards to the evaluation of conventional medicine therapies.

When it comes to the practicalities of undertaking economic analyses of CAM therapies, a number of arguments can be found in the literature as to why the evaluation of this modality may differ to that of conventional medicine.[11,19,24] One such argument is that CAM offers something that cannot be detected by existing health outcomes measurement, such as the experience of holistic-practitioner care by the patient.[19,25] Others claim that it is not feasible to conduct randomized trials for therapies that are not well defined.[26] For example, how is a 'course of massage therapy' defined? Such arguments are valid to the extent that they identify challenges to be overcome. However, these arguments do not fully acknowledge that the economic evaluation of pharmaceuticals, despite its general acceptance, is still faced with many of the same challenges.[27]

Some governmental agencies, such as NICE in the UK, recommend the use of quality-of-life instruments (in particular the EQ-5D) rather than condition-specific measures in economic evaluations, so as to compare 'like with like'. Quality-of-life outcome measures are designed to capture the net effects on patients of a given treatment, both positive and negative, including the recognized 'intervention effect'. The intervention effect occurs where an overall improvement in quality of life occurs not just as a direct result of the treatment being trialed but also as a result of any additional care that the participant may have received as a consequence of being part of a trial that they would not have received otherwise. In the same way, quality-of-life measures should be able to measure not just a particular CAM intervention effect but also the overall effect of holistic treatment.

Other problems encountered in the economic evaluation of pharmaceuticals include the standardization of therapy, so that the definition of a 'standard course' of a particular therapy is broadly accepted and can be generalized.[28] To a certain extent, this has been overcome by the implementation of standard treatment guidelines in conventional medicine, which have evolved as a result of the evidence provided by randomized trials. While the concept of the standardization of CAM therapies for the purpose of economic evaluation poses some interesting new challenges, it is difficult to identify compelling reasons as to how these challenges are sufficiently different from those faced by conventional medicine interventions to warrant their exclusion from this type of analysis.

Examples of another area of economic evaluation, cost–benefit analysis, incorporating the inclusion of patients' preferences, have also begun to appear in the CAM literature.[28,29] Cost–benefit analysis differs from cost–effectiveness (or cost–utility analysis) in that the outcome differences between comparators are measured in monetary terms. The potential advantage of using a cost–benefit approach in the evaluation of CAM, compared with cost–effectiveness or cost–utility, is that the scope for analysis is broader. Monetary values can be assigned to health outcomes by consumers using three general approaches:[18]

  • A human capital approach

  • Revealed preferences

  • Stated preference of willingness to pay

Such evaluations may provide supplementary evidence for decision makers and funders of CAM therapies.

It may be that the economic analysis of conventional medicine and CAM do not differ so much in core methodological approaches but rather in the magnitude and consequent measurement of treatment effects. Take, for example, the treatment of a person with diabetes. Unless their blood-glucose levels are controlled within a normal range, it is likely that the person will suffer morbidity and, possibly, mortality as a result of that condition. In this case, conventional medical treatment, including the use of glucose-modifying agents, is likely to have a significant positive impact on that person's quality of life. However, either the condition or the conventional medical treatment may also have other unwanted effects that decrease the person's quality of life. Such unwanted effects may be treated with CAM therapies. CAM therapies may also be used to assist with weight loss or lifestyle modifications that can alter the underlying pathophysiology of the disease. In this case, CAM therapy may still show a positive value for incremental cost per quality-adjusted life year, which is simply smaller than that for the conventional medicine.

However, the cost–effectiveness of conventional medicine and, probably, CAM, forms a spectrum. It may be true, in a differing scenario, that CAM can be shown to have a greater positive effect on quality-of-life outcomes compared with conventional medicine. Another potentially interesting question that then arises is whether the method for identifying an acceptable cost–effectiveness ratio threshold would differ between conventional medicine and CAM, or when they are analyzed together. This is another possible area for future research.

Finally, it is important that all economic research should be conducted with an awareness of the theoretical underpinnings of the philosophy and beliefs of CAM practice and how these differ from conventional medicine. This is important as some of the current failures of conventional medicine, including the encouragement of healthy behavior, the holistic treatment of users and equity and access issues surrounding conventional health services are all reasons given for accessing CAM services.[30] Given the cost, outcome and policy implications of CAM use and its relationship to conventional therapies, its assessment in economic terms is a rich area for future research.


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