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Padula WV, Kolchinsky P. Can Generalized Cost-Effectiveness Analysis Leverage Meaningful Use of Novel Value Elements in Pharmacoeconomics to Inform Medicare Drug Price Negotiation? VALUE IN HEALTH : THE JOURNAL OF THE INTERNATIONAL SOCIETY FOR PHARMACOECONOMICS AND OUTCOMES RESEARCH 2024; 27:1100-1107. [PMID: 38677362 DOI: 10.1016/j.jval.2024.04.013] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 12/20/2023] [Revised: 03/08/2024] [Accepted: 04/09/2024] [Indexed: 04/29/2024]
Abstract
OBJECTIVES Decision makers considering using cost-effectiveness analysis (CEA) to inform health-technology assessment must contend with documented and controversial shortfalls of CEA, including its assumption of disease severity independence and static pricing. ISPOR has recently introduced novel value elements besides direct healthcare cost and effectiveness for the patient, and these should be captured in CEA. Although novel value elements advance our understanding of "what" should be measured (value of hope, severity of disease, health equity, etc), there is limited direction on "how" to measure them in conventional CEA. Furthermore, with Medicare empowered to set drug prices under the Inflation Reduction Act, it is not clear what role CEA might have on where prices are set, given objections to the quality-adjusted life year in conventional approaches. METHODS We critically reviewed the evidence for expanding conventional CEA methods to a more generalized approach of generalized CEA (GCEA). RESULTS GCEA accounts for methods that address objections to the quality-adjusted life year and incorporate novel value elements. Although GCEA offers advantages, it also requires further research to develop "off-the-shelf" resources to help inform, for example, maximum fair price in the context of Medicare drug price negotiation. CONCLUSIONS Should a shift toward GCEA reveal that the societal value of novel medicines exceeds their market-based costs, which will raise the key question of what market failure Medicare negotiation is meant to solve, if any, and therefore what the appropriate role of such negotiation might be to maximize the value society might garner from the development of novel medicines.
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Affiliation(s)
- William V Padula
- Department of Pharmaceutical and Health Economics, Alfred E. Mann School of Pharmacy & Pharmaceutical Sciences, University of Southern California, Los Angeles, CA, USA; Leonard D. Schaeffer Center for Health Policy and Economics, Los Angeles, CA, USA; Stage Analytics, Baltimore, MD, USA.
| | - Peter Kolchinsky
- RA Capital Management, Boston, MA, USA; No Patient Left Behind, Westland, MI, USA
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Brinkmann C, Stargardt T, Brouwer WBF. From Health to Well-Being: Toward a Monetary Valuation of a Well-Being-Adjusted Life-Year. VALUE IN HEALTH : THE JOURNAL OF THE INTERNATIONAL SOCIETY FOR PHARMACOECONOMICS AND OUTCOMES RESEARCH 2024; 27:857-870. [PMID: 38447745 DOI: 10.1016/j.jval.2024.02.015] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 08/31/2023] [Revised: 01/23/2024] [Accepted: 02/25/2024] [Indexed: 03/08/2024]
Abstract
OBJECTIVES Economic evaluations using broader measures to capture benefits beyond improved health can inform policy making, but only if the monetary value of gains measured using these instruments is understood. This study explored contingent valuation as a method to estimate the monetary value of a well-being-adjusted life-year (WALY) as measured by ICEpop Capability Measure for Adults (ICECAP-A). METHODS In a large online survey of representative samples from 7 European countries, participants valued a change in the ICECAP-A from their current health state to a randomly assigned hypothetical state. Participants were instructed that an unspecified treatment could avoid a loss or produce a gain in well-being and were asked for their willingness to pay (WTP) for this treatment. WTP per WALY was calculated using an aggregated approach that used ICECAP-A tariffs from the United Kingdom. RESULTS We analyzed a sample of 7428 observations, focusing on avoided losses (n = 6002) because the results for gains were not theoretically valid. Different cutoff points for a marginal change were explored. Depending on the definition of a marginal change, WTP per WALY averaged between €13 323.28 and €61 375.63 for avoided losses between [0, 0.5] and [0, 0.1], respectively, for 1 month. Mean WTP per WALY varied across the countries as follows: Denmark (€17 867.93-€88 634.14), France (€10 278.35-€45 581.28), Germany (€12 119.39-€54 566.56), Italy (€11 753.69-€52 161.25), The Netherlands (€14 612.88-€58 951.74), Spain (€11 904.12-€57 909.17), and United Kingdom (€13 133.75-€68 455.85). CONCLUSION Despite the inherent limitations of our study, it offers valuable insights into methods for eliciting the WTP for changes in capability well-being as measured with ICECAP-A.
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Affiliation(s)
- Carolin Brinkmann
- Hamburg Center for Health Economics, Universität Hamburg, Hamburg, Germany.
| | - Tom Stargardt
- Hamburg Center for Health Economics, Universität Hamburg, Hamburg, Germany
| | - Werner B F Brouwer
- Erasmus School of Health Policy & Management, Erasmus University Rotterdam, Zuid-Holland, Rotterdam, The Netherlands
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Xu L, Chen M, Angell B, Jiang Y, Howard K, Jan S, Si L. Establishing cost-effectiveness threshold in China: a community survey of willingness to pay for a healthylife year. BMJ Glob Health 2024; 9:e013070. [PMID: 38195152 PMCID: PMC10806867 DOI: 10.1136/bmjgh-2023-013070] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Grants] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Received: 06/07/2023] [Accepted: 12/06/2023] [Indexed: 01/11/2024] Open
Abstract
INTRODUCTION The willingness to pay per quality-adjusted life year gained (WTP/Q) is commonly used to determine whether an intervention is cost-effective in health technology assessment. This study aimed to evaluate the WTP/Q for different disease scenarios in a Chinese population. METHODS The study employed a quadruple-bounded dichotomous choice contingent valuation method to estimate the WTP/Q in the general public. The estimation was conducted across chronic, terminal and rare disease scenarios. Face-to-face interviews were conducted in a Chinese general population recruited from Jiangsu province using a convenience sampling method. Interval regression analysis was performed to determine the relationship between respondents' demographic and socioeconomic conditions and WTP/Q. Sensitivity analyses of removing protest responses and open question analyses were conducted. RESULTS A total of 896 individuals participated in the study. The WTP/Q thresholds were 128 000 Chinese renminbi (RMB) ($36 364) for chronic diseases, 149 500 RMB ($42 472) for rare diseases and 140 800 RMB ($40 000) for terminal diseases, equivalent to 1.76, 2.06 and 1.94 times the gross domestic product per capita in China, respectively. The starting bid value had a positive influence on participants' WTP/Q. Additionally, residing in an urban area (p<0.01), and higher household expenditure (p<0.01), educational attainment (p<0.02) and quality of life (p<0.02) were significantly associated with higher WTP/Q. Sensitivity analyses demonstrated the robustness of the results. CONCLUSION This study implies that tailored or varied rather than a single cost-effectiveness threshold could better reflect community preferences for the value of a healthy year. Our estimates hold significance in informing reimbursement decision-making in health technology assessment in China.
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Affiliation(s)
- Lizheng Xu
- The George Institute for Global Health, Faculty of Medicine and Health, University of New South Wales, Sydney, New South Wales, Australia
| | | | - Blake Angell
- The George Institute for Global Health, Faculty of Medicine and Health, University of New South Wales, Sydney, New South Wales, Australia
| | - Yawen Jiang
- Sun Yat-Sen University School of Public Health Shenzhen, Shenzhen, Guangdong, China
| | - Kirsten Howard
- Menzies Centre for Health Policy and Economics, The University of Sydney Faculty of Medicine and Health, Sydney, New South Wales, Australia
- School of Public Health, The University of Sydney Faculty of Medicine and Health, Sydney, New South Wales, Australia
| | - Stephen Jan
- The George Institute for Global Health, Faculty of Medicine and Health, University of New South Wales, Sydney, New South Wales, Australia
| | - Lei Si
- School of Health Science, Western Sydney University, Penrith South, New South Wales, Australia
- Translational Health Research Institute, Western Sydney University, Penrith South, New South Wales, Australia
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Shafrin J, Quddus S, Marin M, Scanlon D. A Decade of Health Innovation: The Impact of New Medicines on Patient Health and the Implications for NICE's Size of Benefit Multiplier. VALUE IN HEALTH : THE JOURNAL OF THE INTERNATIONAL SOCIETY FOR PHARMACOECONOMICS AND OUTCOMES RESEARCH 2023; 26:1435-1439. [PMID: 37391164 DOI: 10.1016/j.jval.2023.06.009] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 02/08/2023] [Revised: 06/01/2023] [Accepted: 06/16/2023] [Indexed: 07/02/2023]
Abstract
OBJECTIVES This study aimed to estimate the incremental health benefits of pharmaceutical innovations approved between 2011 and 2021 and the share that would surpass the National Institute for Health and Care Excellence (NICE) "size of benefit" decision weight thresholds. METHODS We identified all US-approved drugs between 2011 and 2021. Health benefits, in terms of quality-adjusted life-years (QALYs) for each treatment, were extracted from published cost-effectiveness analyses. Summary statistics by therapeutic area and cell/gene therapy status identified the treatments with the largest QALY gains. RESULTS The Food and Drug Administration approved 483 new therapies between 2011 and 2021 and of these 252 had a published cost-effectiveness analysis meeting our inclusion criteria. The average incremental health benefits produced by these treatments were 1.04 QALYs (SD = 2.00) relative to standard of care, with wide variation by therapeutic area. Pulmonary and ophthalmologic therapies produced the highest health benefits with 1.47 (SD = 2.17, n = 13) and 1.41 QALYs gained (SD = 3.53, n = 7), respectively; anesthesiology and urology had the lowest gains (< 0.1 QALYs). Cell and gene therapies produced an average health benefit that was 4 times greater than noncell and gene therapies (4.13 vs 0.96). Among the top treatments in terms of incremental QALYs gained, half (10 of 20) were oncology therapies. Three of 252 treatments (1.2%) met NICE's threshold for a "size of benefit" multiplier. CONCLUSIONS Treatments for rare disease, oncology, and cell and gene therapies produced some of the highest level of health innovation relative to previous standard of care, but few therapies would have qualified for NICE's "size of benefit" multiplier as currently constructed.
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Affiliation(s)
- Jason Shafrin
- Center for Healthcare Economics and Policy, FTI Consulting, Los Angeles, CA, USA.
| | - Sabiha Quddus
- Center for Healthcare Economics and Policy, FTI Consulting, Washington, DC, USA
| | - Moises Marin
- Center for Healthcare Economics and Policy, FTI Consulting, Washington, DC, USA
| | - Dennis Scanlon
- Center for Health Care and Policy Research, Pennsylvania State University, State College, PA, USA
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Ye Z, Abduhilil R, Huang J, Sun L. Willingness to Pay for One Additional Quality Adjusted Life Year: A Population Based Survey from China. APPLIED HEALTH ECONOMICS AND HEALTH POLICY 2022; 20:893-904. [PMID: 35934772 PMCID: PMC9358064 DOI: 10.1007/s40258-022-00750-z] [Citation(s) in RCA: 3] [Impact Index Per Article: 1.5] [Reference Citation Analysis] [Abstract] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Accepted: 07/18/2022] [Indexed: 06/07/2023]
Abstract
OBJECTIVE The aim of this study was to estimate the population's willingness to pay (WTP) for an additional quality-adjusted life-year (QALY) in China. METHODS The WTP for an additional QALY (WTP/Q) was estimated using a contingent valuation survey with quota sampling and snowball sampling, using a pre-designed questionnaire with 18 hypothetical scenarios. The change in health state was depicted by the EQ-5D-5L. The questionnaires were completed by telephone and face-to-face interviews. Two-part regression models were used to test validity and how different factors affect WTP/Q. RESULTS A total of 2008 people participated in this survey and provided 3265 WTP responses for further analysis. The average WTP/Q for the entire sample is 113,120 Renminbi (RMB) (USD 16,884), which is 1.75 times the gross domestic product (GDP) per capita. For the quality-of-life improvement scenarios, the mean WTP/Q is RMB 78,907 (USD 11,777, 1.22 times GDP per capita), which is significantly lower than the life extension scenarios (RMB 177,761, USD 26,531, 2.76 times GDP per capita). Age was found to be negatively related to positive WTP. Educational level was positively related to the probability of reporting positive WTP and the level of WTP/Q. Although the EQ-5D-5L utility scores of respondents did not prove to be statistically significant determinants of WTP/Q, the two dimensions of EQ-5D-5L, pain/discomfort and anxiety/depression, had an impact on WTP/Q. In addition, WTP/Q was higher when the health outcome had a 50% probability of occurring than when the health outcome was 100% certain. WTP/Q was higher when a lower health gain was presented to the respondent. CONCLUSION This study provides empirical evidence of the monetary value of an additional QALY from a sample of the Chinese population. In addition, a higher threshold for end-of-life therapies should be considered.
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Affiliation(s)
- Ziping Ye
- College of Business Administration, Shenyang Pharmaceutical University, Shenyang, 110016 China
- School of Public Administration, Hainan University, Hainan, China
| | - Raela Abduhilil
- College of Business Administration, Shenyang Pharmaceutical University, Shenyang, 110016 China
| | - Jiaxin Huang
- College of Business Administration, Shenyang Pharmaceutical University, Shenyang, 110016 China
| | - Lihua Sun
- College of Business Administration, Shenyang Pharmaceutical University, Shenyang, 110016 China
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Lakdawalla DN, Phelps CE. A guide to extending and implementing generalized risk-adjusted cost-effectiveness (GRACE). THE EUROPEAN JOURNAL OF HEALTH ECONOMICS : HEPAC : HEALTH ECONOMICS IN PREVENTION AND CARE 2022; 23:433-451. [PMID: 34495445 PMCID: PMC8964662 DOI: 10.1007/s10198-021-01367-0] [Citation(s) in RCA: 14] [Impact Index Per Article: 7.0] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Grants] [Track Full Text] [Figures] [Subscribe] [Scholar Register] [Received: 01/06/2021] [Accepted: 07/29/2021] [Indexed: 06/13/2023]
Abstract
The generalized risk-adjusted cost-effectiveness (GRACE) model generalizes conventional cost-effectiveness analysis (CEA) by introducing diminishing returns to Health-Related Quality of Life (QoL). This changes CEA practice in three ways: (1) Willingness to pay (WTP) increases exponentially with untreated illness severity or pre-existing permanent disability, and WTP ends up lower for mild diseases but higher for severe diseases compared with conventional CEA; (2) Average treatment effectiveness should be adjusted for uncertainty in outcomes; and (3) The marginal rate of substitution between life expectancy and QoL varies with health state. Implementing GRACE requires new parameters describing risk preferences over QoL, the marginal rate of substitution between life expectancy (LE) and QoL, and the variance and skewness of treatment outcomes distributions. In this paper, we provide: (1) a generalized WTP threshold incorporating the possibility of permanent disability; (2) a simpler method to estimate the tradeoff rate between QoL and LE, eliminating the need to carry out treatment-by-treatment estimates; (3) a more-general method to adjust WTP for illness severity that permits non-constant relative risk-aversion in QoL; (4) a new approach to estimating risk-preferences over QoL, leveraging established empirical methods from "happiness" economics; and (5) a step-by-step guide for practitioners wishing to implement multi-period GRACE analyses.
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Affiliation(s)
- Darius N. Lakdawalla
- School of Pharmacy, Sol Price School of Public Policy, The Leonard D. Schaeffer Center for Health Policy and Economics, University of Southern California, Los Angeles, CA USA
- The National Bureau of Economic Research (NBER), Cambridge, MA USA
| | - Charles E. Phelps
- University of Rochester, Rochester, NY USA
- Departments of Economics and Public Health Sciences, University Professor and Provost Emeritus, University of Rochester, Rochester, NY USA
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