Dimensions of value, assessment, and decision making

Adrian TowseDirector of the Office of Health EconomicsVisiting Professor London School of Economics

HTAi Tokyo May 2016

Dimensions of value, assessment, and decision making

HTAi Tokyo May 2016

Agenda

• Identifying the elements of value • Methods of assessing value • Translation to price and affordability

1

2

3

HTAi Tokyo May 2016

An overview of the process (1) A reordering of process?

SafetyEfficacy,

effectiveness

Value for money (CE)

Other factors of value to D-M

(ethical issues, social values, feasibility of

implementation, unmet needs,

innovation value, legal issues, …)

Affordability (BIA)

Criteria: broader definition of value (risks, benefits)

Overall D-M Framework: Opportunity costs (value-for-money)

Source: Ron Goeree, Director PATH Research Institute, Professor, McMaster University

HTAi Tokyo May 2016

An overview of the process (2) Getting to Health System Value1

Comparative Clinical

Effectiveness

Additional Benefits & Context:Health System

Intervention Value

Affordability,

Incremental cost per

outcomes achieved

Decision making process

Health System Value

1Adapted with permission from Steve Pearson, ICER

HTAi Tokyo May 2016

What elements of value? Usually recognised and Less frequently / consistently recognised

Usually recognised

• Health effects that are well captured

• Cost offsets

• Uncertainty

Less frequently / consistently recognised

• Health effects less well captured

• Wider societal impacts• Severity /unmet need• National Priorities • Process issues• Innovation• Patient preferences• The value of knowing

HTAi Tokyo May 2016

What elements of value? Precision medicine

“..an approach to disease treatment and prevention that seeks to maximize effectiveness by taking into account individual variability in genes, environment, and lifestyle”1

• Enabling a treatment effective only in a small fraction of the population to be made available

• Reducing or avoiding the adverse effects associated with treatment (including the medical and nonmedical costs of managing them)

• Reducing or avoiding time delays in selecting the most appropriate intervention

• “Value of knowing”

1. President Obama’s Personalized Medicine Initiative

HTAi Tokyo May 2016

What elements of value?Precision medicine – examples

A. Reduce or avoid adverse drug reactions

B. Reduce or avoid delay in

selecting optimal treatment

C. Increase patient

adherence or willingness to

start preventive interventions

D. Enable Tx with a small

proportion of responders to be made available

E. Value of Knowing

(i) Allows Tx to obtain licence based on Dx availability

Example:BCR-ABL in CML

Example: PreDx Diabetes Risk

(i) Tx has higher chance to obtain licence or to be

‘rescued’ with Dx.Example: EGFR

mutation in NSCLC

Example: Oncotype DX in breast cancer

(ii) Use of a licensed Tx is

increased with Dx.Example: HLA-B*

5701 in HIV

(ii) Increases Tx cost effectivenessExample: HER2 in

breast cancer

(iii) Dx supports clinical trials and hasten market approval of Tx.

Example: ALK Fish in NSCLC

Adapted from Garau et al. 2013

HTAi Tokyo May 2016

What elements of value?The value of knowing

• Increasing the certainty of a patient’s response to a medicine

• “Knowing for the sake of knowing” (Asch et al., 1999)

• The value of hope (Lakdawalla et al., 2012)

• Real option value (Cook et al., 2011)

• Insurance value (Lakdawalla et al., 2015)

• Scientific spillovers

HTAi Tokyo May 2016

Agenda

• Identifying the elements of value • Methods of assessing value • Translation to price and affordability

1

2

3

HTAi Tokyo May 2016

Steps to “a decision on value”

What elements of value?

How measured, evidenced and valued

/rated?

How aggregated and judged?

A “decision on value”• Health effects• Well captured• Cost offsets• Uncertainty• Health effects that

are less well captured• Wider societal

impacts• Severity /unmet need• National Priorities• Process issues• Innovation• Patient Preferences• The Value of Knowing

• Measured: e.g. use of QALYs, clinical outcomes

• Evidenced: e.g. preference for RCTs

• Valued /rated: e.g. population or patient values, use of categories or discrete scales

• Challenges– Scientific

uncertainty– Value judgements

• Weighting:– Deliberative

processes– Algorithms

• How structured could /should this become?

– Avoid a “black box”

1 2 3

HTAi Tokyo May 2016

Use of categories or discrete scales

ASMR rating

Definition

I Major therapeutic progress

II

Significant progress in terms of therapeutic efficacy and/or reduction in side effects

III

Modest progress in terms of therapeutic efficacy and/or reduction in side effects

IVMinor progress in terms of efficacy/usefulness

V No therapeutic progress

NICE• Does a

technology get assessed or not?

• Exemption / separate treatment of orphan drugs

• End of life threshold uprating and use for small patient populations

HTAi Tokyo May 2016

A system not based on MCDA

MCDA converts all input evaluations of decision outcomes into a common currency of value added—not financial value, preference value

Source: Professor Larry Phillips London School of Economic and Facilitations Limited

HTAi Tokyo May 2016

An MCDA example

HTAi Tokyo May 2016

Results of weighting in the MCDA examplePer cent

‘Experts’ workshop

‘Patients’ workshop 

Extent to which treatment is available in the absence of the new medicine 19.5  11

Disease’s mortality impact with current SoC 14  11.5

Morbidity and disability with the disease with current SoC 12  15

Impact of the disease on patients’ and carers’ daily lives with current SoC 8  15

Sub-total weight for impact of disease / extent of unmet need 53.5 52.5

Evidence of treatment clinical efficacy and patient clinical outcome 27.5 17.5

Drug safety 8 7.5

Social Impact of the treatment on patients’ and carers’ daily lives 11  17.5

Treatment innovation 0  5

Sub-total weight for impact of new medicine 46.5 47.5 

Total 100 100

HTAi Tokyo May 2016

Agenda

• Identifying the elements of value • Methods of assessing value • Translation to price and affordability

1

2

3

HTAi Tokyo May 2016

Two main approaches to pricing

• cost-effectiveness requirements. Drugs are assessed for use or for a reimbursement price by looking at incremental health related effects (often measured and valued using the Quality Adjusted Life Year (QALY) and incremental costs relative to existing treatments using cost effectiveness analysis (CEA).

• therapeutic added value requirements. These typically involve comparison with other, established drugs in the same class, or with other treatments used in the standard of care (SoC) with higher prices allowed or negotiated for improved health or health related effects in the form of efficacy, better side effect profile or convenience.

HTAi Tokyo May 2016

The England cost-effectiveness threshold saga

HTAi Tokyo May 2016

Sweden: Equity /”need” adjusted reimbursement decisions compared with a constant cost-effectiveness thresholdCost/QALY

Source: Ulf Persson, IHE

Threshold

Adjusted threshold

Degree of severity/”need”0.5 1.00.90.1 0.2 0.3

HTAi Tokyo May 2016

Use of categories or discrete scales to support different categories of pricing

ASMR rating

Definition

I Major therapeutic progress

II

Significant progress in terms of therapeutic efficacy and/or reduction in side effects

III

Modest progress in terms of therapeutic efficacy and/or reduction in side effects

IVMinor progress in terms of efficacy/usefulness

V No therapeutic progress

NICE• Does a

technology get assessed or not?

• Exemption / separate treatment of orphan drugs

• End of life threshold uprating and use for small patient populations

HTAi Tokyo May 2016

Elements of value, assessment, and pricing– a summary

• Value extends beyond health gain and system cost savings

• No one way to scale, score, and weight• Decision support tools are essential

• Can convert value to price directly (ICERs and thresholds) or indirectly (TAV)

• Opportunity cost is important • But using a threshold is not easy• TAV with categories and discrete scales are an

alternative

HTAi Tokyo May 2016

ReferencesAsch, D., J. Patton, and J. Hershey, 1990. Knowing for the sake of knowing: the value of prognostic information, Medical Decision Making 10, pp. 47-57.

Cook, J. P., J. H. Golec, J. A. Vernon, and G. H. Pink, 2011. Real option value and path dependence in oncology innovation, International Journal of the Economics of Business 18(2), pp. 225-238.

Garau, M., Towse, A., Garrison, L., Housman, L. and Ossa, D. (2013). “Can and should value-based pricing be applied to molecular diagnostics?” Personalized Medicine. 10(1), 61-72.

Garrison L., Mestre-Ferrandiz J, and Zamora B (2016 forthcoming). The Value of Knowing and Knowing the Value: Improving the Health Technology Assessment of Complementary Diagnostics. EPEMED

Lakdawalla,D. , Malani, A. and Reif, J. (2015). 'The Insurance Value of Medical Innovation', National Bureau of Economic Research Working Paper w21015

Lakdawalla, D. N., J. A. Romley, Y. Sanchez, J. R. Maclean, J. R. Penrod, and T. Philipson, 2012. How cancer patients value hope and the implications for cost-effectiveness assessments of high-cost cancer therapies, Health Aff (Millwood) 31(4), pp. 676-682.

Towse, A. and Barnsley, P. (2013). “Approaches to identifying, measuring, and aggregating elements of value.” International Journal of Technology Assessment in Health Care. 29(4), 360-364.

Towse, A. (2014). “Value of drugs in practice”. In A. Culyer ed. Encyclopedia of Health Economics. San Diego, CA, Elsevier. pp. 432-440.

Adrian TowseThe Office of Health Economics

Registered address Southside, 7th Floor, 105 Victoria Street, London SW1E 6QT

Website: www.ohe.org  Blog: http://news.ohe.orgEmail: [email protected]

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