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AdminJun 18, 20242 min read

The Evolving Role of Observational Studies in Healthcare: Enhancing Payer Utility and Impact

Blog authored by Ashley Jaksa (VP, Scientific Strategy & Partnerships) and Pat Arena (Director, Scientific Strategy)

Observational studies play a pivotal role in modern healthcare, providing critical insights that complement randomized controlled trials (RCTs). A recent article in the Journal of Managed Care & Specialty Pharmacy highlights the current landscape, value, and recommendations for the utility of observational studies in payer decision-making, specifically as they relate to the recent Centers for Medicare & Medicaid Services (CMS) negotiations with the manufacturers of ten high-cost products covered by Medicare. 


Cohort, case-control, and cross-sectional designs are all examples of observational studies that supply real-world evidence (RWE), which is crucial for evaluating the safety and effectiveness of healthcare interventions across diverse patient populations. Unlike RCTs, observational studies can capture data from routine clinical practice, making them more representative of actual patient experiences and, for CMS’s purposes, more representative of the Medicare population in question. 


This blog will outline several of our article’s key points, highlighting the role of observational studies not just for the specific case of the CMS drug price negotiations but for payer applications more broadly. 


  • Value of Observational Studies: These studies are invaluable for generating evidence about treatment outcomes in real-world settings. They provide data on long-term safety and effectiveness, patient adherence, and healthcare utilization, which are often not feasible to record in RCTs due to their controlled environments and limited duration. This aspect is especially relevant for CMS’s price negotiations, which are taking place seven to eleven years after regulatory approval and thus long after initial RCT evidence was generated.  

  • Current Challenges and Solutions: The article identifies common challenges, such as data quality and selection biases, and proposes solutions, such as using validated data sources, employing advanced statistical techniques, and collaborating with payer/regulatory bodies to align on key aspects of study design.


  • Payer Recommendations: To ensure observational studies are used effectively, the article recommends that payers, like CMS, commit to using observational studies so that researchers understand that such studies are a valid form of evidence when designed with clear research questions, appropriate data sources, and robust analytical methods.


  • Future Directions: As there is a growing need to enhance the credibility and utility of observational studies, CMS should consider releasing guidance and recommendations focused on them. CMS should focus on building upon the strong foundation of guidance already published by regulators (like the Food and Drug Administration) and other payers. CMS and other key bodies could also invest in improving data infrastructure to facilitate the generation of high-quality observational studies. 

Aetion, a leader in RWE generation, exemplifies how observational studies can be integrated into healthcare decision-making. Aetion’s platform provides robust, scientifically validated analytical tools to transform real-world data (RWD) into evidence that meets both payer and regulatory standards, supporting critical decisions in drug approval, safety monitoring, and value-based care.


In conclusion, observational studies are essential for providing comprehensive evidence on healthcare interventions. By addressing current challenges and adhering to rigorous scientific standards, these studies can significantly enhance their payer/regulatory utility and impact on public health.


For more information on how Aetion can help support your most critical healthcare decisions with robust, decision-grade evidence, get in touch with us here.