ABSTRACT
The choice is difficult in medicine. But individual physicians and patients must make medical decisions rather than organizations or pharmaceutical companies. The choice concerns the transparency of the decision-making process (evidence based medicine), and mistrust of the methods used in cost-effectiveness analysis. Medicare's policy of paying for any medical advance that has positive benefits, regardless of its costs, is un-sustainable. Cost-effectiveness information may assume a more important role in future coverage decisions with regard to outpatient prescription drugs, but at the private level, rather than at the national one. Functional equivalence of drugs reflects a reference-pricing technique applied to a therapeutic category--reimbursement for compounds of similar efficacy within a therapeutic class set to the lowest-priced product in the class. Essentially, a standard of functional equivalence applies a cost-effectiveness principle: assuming that alternative interventions are equivalent, one should not pay more for one of them.