Economic assessment of new health care technologies is practiced among
an increasing number of countries around the world. Today, the United States
is taking steps in requiring economic evaluation for new healthcare technologies.
Michael E. Minshall and John Watkins consider some of the issues.
Health Technology Assessments (HTAs) are increasing in countries around
the world. To date, HTA requirements exist in about 30 countries, including
Australia, Canada, Germany, The Netherlands, Spain, Sweden and the UK.
There are discussions within a number of other countries, including China
and Korea, to add health economics and outcomes research (HEOR) data
into HTAs, making them requirements for formulary approval and access to
medical technologies, drugs and other kinds of medical treatment.
In the United States, the environment for health-economic data is changing.
The US health care market contains two major segments: the public payer
and the private payer groups, both representing about 50% of the market.
While most HTA work completed in the United States over the past 15 to 17
years has been in the private sector, the public sector, including government
entities such as Medicare and Medicaid, has initiated steps to consider HTAs
for technology adoption.
Two entities in the private sector that provide a good indication of where
HTAs are moving within the United States are the Academy of Managed Care
Pharmacy (AMCP) Guidelines and the more recently published Wellpoint
Guidelines. Additionally, USHTA requirements focus more on the budgetary
impact and less on the cost-effectiveness of new health technologies.
Moving forward, companies will be required to perform HTA analyses to get
new technologies on formulary and covered by private and public plans.
HTA in the USA: What Led us to this Point?
The managed care revolution of the late-1980s and 1990s produced a
demand for evidence-based formulary placement. Additionally, it called for
the pharmaceutical and biotechnology industries to provide information on
budget impact and to establish the “value” of new medicine, including clinical,
economic and humanistic ideals.
Today there are about 600 different health care providers in the US private
sector. Theoretically, all of them could have their own HTA requirements, as
there are no mandatory national guidelines within the United States.
However, when segmented by larger groups, it's evident that about 40 payers,
or about 40 managed care plans, represent about 80 percent of the market.
HTA in the USA: The Existing Guidelines
The AMCP Guidelines are the first widely-followed and utilized guidelines for
HTA in the United States. They include explicit mentions of non-U.S. bodies, such as the National Institute for Health and Clinical Excellence (NICE) in the
UK, and are required by many managed care plans across the United States.
With three versions, including the latest, Version 2.1 (April 2005), which clarified
the differences between budget-impact and cost-effective models, the
AMCP Guidelines are an invaluable tool for referencing the appropriate steps
to prepare dossiers for submissions. While not mandatory, the AMCP
Guidelines are known and followed by many industry professionals for HTAs.
Wellpoint Guidelines (Version 5.1, October 2005)
Wellpoint Health Networks, with about 32 million covered lives, is currently
the largest HMO in the US. The Wellpoint Guidelines establish two sets of
requirements - one for new products and the other for existing products, as
well as a reevaluation process and guidelines for assessing clinical performance,
cost-effectiveness and system impact versus comparators.
Of particular note in the Wellpoint Guidelines is the distinction between new
and existing products. The Wellpoint Guidelines call for a reevaluation
process after several years, which represent a true departure from the AMCP
Guidelines and other guidelines' directives.
Seven Key Elements of the Wellpoint Guidelines
Evidentiary and Analytical Standards - While the Wellpoint Guidelines state
that evidence must meet accepted standards, what's of special interest is
Wellpoint's position that “claims made for treatment effect, cost-effectiveness
and budget impact” must be done within the Wellpoint treating environment.
This demonstrates that Wellpoint is initiating an analytical standards
component, monitoring clinical evidence, cost-effectiveness and budget
impact over time for verification.
For example, if a company indicates the ICER for a new product is $20,000
per life year gained, Wellpoint will revisit this claim in three, four and five year
spans to determine if its standard is met. If not, renegotiations could occur
between the company and Wellpoint. For pharmaceutical and biotechnology
companies, this approach suggests that cost-effectiveness claims will need
to be reevaluated and verified after a given time period.
Outcomes Assessments - Wellpoint states that “where a previous submission
has been made detailing the epidemiology of the disease state and the product's
place in therapy, it is important to revisit this claim and confirm its relevance.”
This is significant regarding the verification of claims on a cost-effective, budget-
impact basis. Comparators may “shift” to different products since the first
HTA was performed, potentially requiring pharmaceutical and biotechnology
companies to run comparative analyses again in three to five years time.
Comparator Therapies - The Wellpoint Guidelines state that companies may
be asked to revisit their choice of comparator if after several years there's a
different, most-common comparator.
Outcomes Claims - The Wellpoint Guidelines set a “gold standard” with
regards to randomized, comparative trials with a randomized, active comparator,
as opposed to randomized controlled trials (RCTs) with a placebo
comparator. Additionally, its verbiage “with particular emphasis on well
designed pragmatic trials and their outcomes” is significant considering the
push by pharmaceutical and biotechnology firms over the last 10 to 14 years
for Phase IIIb and Phase IV trials, which are more naturalistic in design.
Quality Adjusted Life Years (QALY) - While the Wellpoint Guidelines do not
mandate a generic cost-per-QALY, Wellpoint is encouraging companies to
present this information, which may help bring the U.S. guidelines into alignment
with other global HTA groups, such as NICE and the Pharmaceutical
Benefits Advisory Committee (PBAC) in Australia.
New Data/Claims - Wellpoint favors a “Probabilistic Sensitivity Analysis” format
related to cost-effectiveness analysis (CEA). This format is well known
to those in the UK and academics in the United States. Many HTA bodies
around the world require this technique to be used in comparative cost-effective
Budget Impact Analysis (BIA) - The Wellpoint Guidelines request that manufacturers
“provide forecasts of the impact of the product on resource utilization, the
pharmacy budget, the medical budget and the total costs of treating the patients
in that disease or therapy area” and state that Wellpoint will assess such forecasts
as part of ongoing product reevaluation. This is the largest departure or
advance from the AMCP Guidelines and will necessitate extra effort and
thoughts around the design, analysis, and interpretation of HTAs.
Centers for Medicare & Medicaid Services (CMS)
In the public sector, several significant issues relate to the CMS. Regarding
cost effectiveness, a legislative mandate to incorporate HTA into the formulary
process is possible, but its outcome is unclear at this time. CMS will likely issue guidance in the next one to two years, but there is no mandatory
The role of CEA has long been at issue. In 1989, Medicare formally proposed
to include CEA as one of several criterions for approving new medical
technologies, but was turned away due to tremendous political opposition.
Reasons for the failure included:
Americans desire and appetite for new medical technology,
Distaste for setting coverage limits,
U.S. population's sense of entitlement for Medicare funds,
Wealthy country with a shortage in health care dollars,
Special interest groups with political influence,
A fragmented U.S. health care system with multiple payers.
The Medicare Modernization Act (MMA) of 2003 contains a provision calling
on the Agency for Healthcare Research and Quality (AHRQ) to conduct
research on outcomes, comparative clinical effectiveness, and appropriateness
of healthcare, including prescription drugs.
CMS released a Guidance document on April 11, 2006 on the National
Coverage Determination (NCD) process stating, “Cost-effectiveness is not a
factor CMS considers in making NCDs.” Additionally, MMA contains language
forbidding Medicare from applying a “functional equivalence” standard
to drugs or biologic agents, thereby eliminating the concept of “reference
pricing” for drugs in the same class, which is widely practiced in
Finally, CMS encourages the use of data from practical clinical trials. This
includes increasing emphasis on health outcomes actually experienced by
patients, such as quality of life, functional status, duration of disability, and
morbidity and mortality, as well as decreasing emphasis on outcomes that
patients do not experience directly, such as changes in laboratory values,
radiographic response, sensitivity/specificity, physiologic parameters, and
other intermediate/surrogate outcomes.
Toward More Rigorous Health-Economic Decision-
Making: One Payer's Experience
Premera Blue Cross, a Blue Cross Blue Shield affiliate, is a commercial PPO
operating primarily in the Pacific Northwest and covering 1.6 million lives
(1.2 million pharmacy lives). Premera recognizes that HTA is necessary
today because of rising health care spending as a percentage of US gross
domestic product (GDP) and a realization that this trend simply cannot continue,
as it is becoming increasingly difficult for employers to provide full
drug coverage for their employees.
HTA in the U.S. private sector is extremely varied, however much is being
done to advance the concept of value-based technology assessment.
Compared to Wellpoint, Premera Blue Cross is much smaller and has fewer
internal resources to support HTA, but it deals with the same basic issues.
These include data limitations and evidence gaps caused by factors such as
ethical limitations on study design, industry sponsorship of clinical trials, and
the time and logistics required to conduct large-scale, long-term outcome
studies. To best handle these gaps, most organizations in the U.S. follow a
pure evidence-based medicine (EBM) doctrine, focusing exclusively on the
clinical evidence and often limited to large-scale, well-designed RCTs and
Like other organizations, Premera focuses on high-quality, RCT evidence and
tries to incorporate best available evidence, which sometimes includes observational study results. Since 2001, Premera has been considering CEA when
such information is available. Best available evidence implies a willingness to
trade a certain amount of rigor for speed. This more pragmatic approach
includes modeling data, CEA and BIA, when reasonable models are available.
Burden of Proof Always Lies with the New Technology
A cardinal principle of EBM is that the burden of proof always lies with the
new technology. This is contrary to predominant U.S. cultural assumptions.
There is a very strong sense in the United States that newer is always better,
unless proven otherwise. But in EBM, older is generally better, in that more
is known about the older product, such as its weak points and strengths.
Given the choice, Premera will usually choose the proven, older technologies
versus newer ones.
Figure 2 outlines the general thought process Premera pharmacy and therapeutics
(P&T) committee members use to evaluate a new product. The
product must be safe, effective and cost-effective for the new technology to
be adopted. The first three steps with drugs are in the realm of Premera's
P&T, an external committee on which no Premera staff are allowed to vote.
The fourth step, BIA, is done internally on the business side.
Premera uses the term “value” in its public statements, which essentially is
a lay term for incremental cost-effectiveness. If the new product costs more
than the comparator, adoption requires demonstration of a clinically meaningful
improvement in outcome and offsetting cost savings - usually from the
payer perspective. However, if the new product costs less than the comparator,
adoption requires a lesser standard of clinical evidence, assuming there
are no hidden costs to offset savings and basic safety and effectiveness are
Figure 3 outlines Premera's HTA drug review process, which was created for
pharmaceutical products. This process is now being expanded to include
Three Examples regarding the Need for Targeted Diagnostics
Gleevec (imatinib) and Iressa (gefitinib) - Lowering the number needed to
treat (NNT) improves cost-effectiveness. To do this effectively, more responsive
and sicker patients must be targeted, which becomes increasingly
important as the cost of the technology increases.
For example, in the case of Gleevec (imatinib) and Iressa (gefitinib), small
molecule, targeted oncology therapies, Gleevec came to market with genetic
markers that identify the responders; Iressa did not. A review of patients
who received each of these drugs through Premera in 2006 found that 364
individuals had received Gleevec, while only 11 were treated with Iressa.
These numbers suggest that both physicians and payers respond favorably
to specific markers that guide them in patient selection.
Drug Example: Exenatide (Byetta) - Exenatide is a new diabetes drug with a
completely new harmacology. While it is fairly expensive compared to alternatives,
when Premera first examined it, the company consulted with local opinion
leaders who thought that it would have a place in therapy but had difficulty
in defining the most cost-efficient patient population. To aid in determining the
most efficient patient population for treatment with exenatide, Premera utilized
the CORE Diabetes Model, which was licensed by the drug manufacturer,
Amylin Pharmaceuticals. The information Premera sought included:
What is its place in therapy?
- New mechanism, costs more than alternatives
- No long-term clinical endpoint trials
- Probably a good drug, But for whom?
CORE Diabetes Model
- Markov model structure using Monte Carlo simulation and tracker variables
- Submodels account for comorbidities and interactions between comorbidities
- Very flexible user inputs for cohort and treatment characteristics
Test case (Hypothesis: change in patient weight would affect diabetes
- Assume cohort on Metformin
- Baseline HbA1c = 8.5% + 1
- BMI = 35 kg/m2 + 5 (base case = 27.5 kg/m2)
- Add exenatide vs. comparator agent or vs. continuing metformin
Exenatide was compared to generic glyburide, which costs about 5%as
much as exenatide, pioglitazone (Actos), insulin glargine (Lantus), and continuation
of metformin. (Note: the metformin only treatment is referred to as
“placebo” in Table 1 that follows.)
Table 1 lists the results for the above treatment options, modeled over a 30-
year time horizon. All comparisons yielded incremental cost-utility ratios of
less than $50,000 per QALY for all treatments.
Diagnostic Example: Oncotype DX - In this test for early-stage breast cancer,
a 21-gene panel gives a risk score that correlates with the likelihood of
distant recurrence of disease after surgery.
Details of the test include:
• 21 gene diagnostic panel for estrogen receptor positive, node negative
- Risk score (range 0-100) predicts likelihood of distant recurrence
- Stratified risk: low (<18), med (18-30) high (>30)
• Draft guidance document for dossier submission was provided to the
• Resulting submission was reviewed for medical policy determination
- Should Premera cover this test?
- If so, for which patients?
The proposed rationale for cost-effectiveness is Chemotherapy (CT) avoidance
in low-risk patients and the basing of treatment strategies on test
results can lead to more informed decisions, improved outcomes and a
potential to reduce overall cost of care. In the Premera evaluation, the key
question was whether the results would be actionable for providers. When
Premera consulted the Premera Oncology Advisory Panel, a representative
group of community-based oncologists, the vast majority of them said they
would probably not advise their patients to forego chemotherapy simply
because of this test result. As a result of this evaluation, Premera approved
the test under very limited conditions in a subgroup of patients who would
be on the borderline and for whom the test might actually make a difference.
This exercise reaffirmed the principle that test results must be actionable in
order to be eligible for coverage.
The United States is moving, albeit slowly, towards some type of nationalized,
cost-effectiveness requirement. What form that takes, whether it will be
a QALY format or straight mortality, is unclear at this time. Moreover, it is
highly likely that the requirements for private payers and public payers will
remain disparate and a multi-faceted approach to value determination will
remain a necessity in the US marketplace for manufacturers.
CEA will be rated at varying degrees of importance by major coverage
groups in the United States, including: the private sector, with HMOs and
PPOs; the public sector, with the CMS and government systems; and fee for
service, which is a smaller part. It's inevitable that CMS becomes more
involved in HTA processes. As part of the MMA of 2002, the U.S. Congress
mandated that CMS incorporate a technology assessment process based on
economics. Since CMS oversees a tremendous part of the medical market
in the United States, CMS can be considered a “bell-weather” entity that
other groups may follow in both the public and private sectors; however, only
time will tell.
It may take many years for the United States to achieve a nationalized, costeffectiveness
requirement, and the country may never get there. The United
States spends about 14% of its GDP on healthcare, a tremendous part of its
entire GDP, and there are many competing interests with input into the
process. In short, a great number of people have a say about what happens
with U.S. health care dollars.