Bias within economic evaluations - the impact of considering the future entry of lower-cost generics on currently estimated incremental cost-effectiveness ratios of a new drug

Impact of Incorporating Future Mandatory Price Reductions with Generic Drug Entry on the Cost-Effectiveness of New Drugs: A Policy Simulation Study of Dupilumab in Atopic Dermatitis Treatment

The introduction of high-cost medications often poses challenges in achieving cost-effectiveness for drug insurance coverage. Incorporating future price reductions for these medications may enhance their cost-effectiveness. We examined the influence of future cost reductions mandated by the national insurer's equal pricing for equivalent drugs (EPED) policy on the cost-effectiveness of dupilumab, a biologic drug for moderate to severe atopic dermatitis in the Korean healthcare system. We conducted a policy simulation study using semi-Markovian cost utility analysis of dupilumab in combination with supportive care (SC) versus SC alone, with and without the EPED policy adjustment. The EPED would lower dupilumab's price to 70% following the entry of a biosimilar drug in 10.3 years. Scenario analyses quantified the impact of changing time to the EPED, chemical versus biological designation, response criteria, discount rates, and time horizons on the Incremental Cost-Effectiveness Ratio (ICER) and acceptability with and without EPED adjustment. The EPED adjustment of dupilumab's future price significantly improved its cost-effectiveness, with a 9.7% decrease in ICER and a substantial 14.6% increase in acceptability. Assuming EPED in 5 years, the ICER fell below the predefined willingness-to-pay threshold. If dupilumab were a chemical drug, EPED adjustment demonstrated a 19.1% increase in acceptability. Incorporating future cost reductions via the EPED system in economic evaluations is crucial, especially for drugs facing imminent generic entry. This study underscores the importance of EPED adjustment in the cost-effectiveness analysis of innovative medications, especially for those nearing willingness-to-pay thresholds.

Incorporating Dynamic Pricing in Cost-Effectiveness Analysis: Are Known Unknowns Valuable?

BACKGROUND

Current practice in health technology assessment (HTA) of pharmaceuticals conducts cost-effectiveness analyses (CEAs) based on a static price or the estimated price at market launch. Recent publications suggest incorporating dynamic pricing. To test the feasibility and importance of including dynamic pricing, we compared the standard static approach to four dynamic scenarios by replicating US-based HTA evaluations with dynamic pricing inputs.

METHODS

The four case examples included omalizumab (Xolair®) for the treatment of allergic asthma, elagolix (Orilissa®) for the treatment of endometriosis, ocrelizumab (Ocrevus®) for the treatment of primary progressive multiple sclerosis (PPMS), and dupilumab (Dupixent®) for the treatment of atopic dermatitis (AD). The primary outcome was the relative percentage change in incremental cost-effectiveness ratios (ICERs) per quality-adjusted life-year (QALY) for two dynamic pricing scenarios versus static pricing. Secondary outcomes included the absolute difference in ICERs versus base-case and an assessment of decision uncertainty.

RESULTS

Base-case ICERs were $327,000, $102,000, $700,000, and $102,000 for allergic asthma, endometriosis, PPMS, and AD, respectively. Across scenarios and case examples, the range of ICERs versus base-case varied from decreases of 56% to increases of 232%. The absolute difference in ICERs versus base-case ranged from decreases of $120,000 to increases of $758,000. Conclusions on cost effectiveness were altered in 2/16 scenarios across the four case examples.

CONCLUSIONS

Given the decision context that US payers face, with prices varying over time, findings suggest further research to reduce uncertainty around price trajectories, as well as conducting or updating multiple assessments over the lifecycle of pharmaceutical products.

Issue with Evaluating Costs Over Time in a Context of Medical Guideline Changes: An Example in Myocardial Infarction Care Based on a Longitudinal Study from 1997 to 2018

Background

Cost studies appear sporadically in the scientific literature and are rarely revised unless drastic technological advancements occur. However, health technologies and medical guidelines evolve over time. It is unclear if these changes render obsolete prior estimates. We examined this issue in a cost study in the context of patients' first myocardial infarction (MI), a clinical area prone to such continuous evolution in care.

Methods

We conducted a longitudinal cost analysis based on a Quebec cohort. Quebec health administrative databases were used to identify incident MI cases using diagnostic codes from the international classification of diseases (ICD-9 and ICD-10). Physician fees and hospitalization costs (ie, costs incurred by the hospital center) were derived from administrative databases and a university hospital's finance department. All costs were converted to 2019 Canadian dollars. Nonparametric bootstraps were used to estimate 95% confidence intervals (CI) of the average costs of an episode of care. Generalized linear regressions were used to examine temporal trends of cost.

Results

Our study sample consists of 261 patients hospitalized for a first MI. The average total cost for this first event was estimated at $5782 (95% CI: $5293 - $6373). Though total costs remained stable over time, physician fees increased by 123% ($1240 vs $2761) whereas total hospital length of stay dropped by 17% (6.6 vs 5.5 days) over the 21-year period.

Conclusion

Patients' first MI hospitalization impose an economic burden on the healthcare system. Though overall costs remained stable, our results suggest that some cost components varied over time.

Cost-effectiveness analysis of treatment timing considering the future entry of lower-cost generics for hepatitis C

Background

Cost-benefit analyses are crucial to inform treatment policies, particularly when the cost of patented drugs is very high. The cost of patented drugs is the limiting factor in hepatitis C treatment. However, hepatitis C drug costs are expected to fall following patent expiration, due to generic drug introduction.

Methods

An existing mathematical model by Shih et al was extended to consider lower-cost future generics in health economic models of hepatitis C. The model compared the cost-effectiveness of treating patients now with patented drugs vs postponing treatment until after patent expiration.

Results

For ledipasvir-sofosbuvir, this study finds that it is almost always more cost effective to treat hepatitis C with high-cost patented drugs immediately rather than waiting for patent expiry. For ledipasvir-sofosbuvir, a generic would need to enter the market at <16.40% of the patented price for delayed treatment to be cost effective. The further that patent expiry is in the future, the more cost effective delayed treatment becomes; however, uncertainty about generic pricing and market entry times are also higher if patent expiry is in the distant future.

Conclusion

It is more cost effective to treat hepatitis C sooner rather than later, regardless of the stage of the disease, and despite the high cost of patented drugs. However, patented drugs are being produced globally for prices much lower than those seen in the UK. Therefore, negotiation of patented drug prices with pharmaceutical companies may be a crucial step in cost effective treatment of hepatitis C.