This is a report on the ISPOR 2023 Forum hosted by ISPOR Boston Regional Chapter
Considerable attention has been given in recent years to the ISPOR “value flower” and potential ways to expand traditional cost-effectiveness analyses (CEA) in order to provide more comprehensive measures of the value of pharmaceutical and medical innovation. Most of these discussions have remained at the theoretical level, however. This Forum provided an overview of recent theoretical and practical extensions to traditional CEA and their implications for value assessment and discussed challenges and opportunities in the implementation of generalized cost-effectiveness analysis (GCEA) methods in practice.
The Session was moderated by Noam Kirson, PhD, Past President of the ISPOR Boston Regional Chapter, and Managing Principal at Analysis Group, Inc. Dr. Kirson introduced the session and raised some key topics for consideration by the panel members, including the relative importance of different petals of the value flower, the implications of measurement challenges, and what the differences between societal value and cost effectiveness may imply for Health Technology Assessments (HTA) and pricing.
The ISPOR Value Flower and Value Frameworks: Update and Future Directions
Professor Lou Garrison, of the CHOICE Institute, School of Pharmacy, University of Washington, discussed the ISPOR value flower and value frameworks, providing an update as well as some thoughts on future directions. The ISPOR value flower emerged from the deliberations of the ISPOR Special Task Force (STF) on Value Assessment Frameworks which issued its report in 2018. That task force was established to produce a white paper that reviewed the plethora of recently emerging value frameworks in order to sort out appropriate approaches and methods. The aim was to support the development and use of high-quality value frameworks that would promote more efficient healthcare decision making in the US, including incentives to product developers. One key observation of the STF was that various value frameworks under development had different aims: they were designed to address different decisions in the cascade of contexts in which value assessments are made. Three important decision contexts were: (1) inclusion of new medicines in the health benefits package of health plans; (2) management of access and utilization once in the benefit package; and (3) use in the shared clinical decision-making of patients and their providers. The different frameworks differed in terms of which of these contexts they addressed. However, all of the frameworks aimed to assess either clinical value or economic value, or both. Health technology assessment often addresses the first of these decisions, assessing cost-effectiveness to establish a value-based price. This group of health economists focused on this decision, noting that the standard methodology for doing this is what can be called conventional CEA, relying on the cost per quality-adjusted life year gained as the primary measure.
The STF, however, discussed both the strengths and limitations of this common metric and concluded that it provided a “good starting point” for the assessment of value but was not without some important limitations. Their deliberations led to a broader framework that they called “augmented” CEA. Conventional CEA was seen as limited in several ways including an under-appreciation of the role of uncertainty in valuation and having too narrow a focus on only individual patients. This led the panel to formulate the ISPOR value flower which identified and defined “novel” elements of value to address these shortcomings. The STF’s formulation was not intended to be the ultimate or definitive parsing of potential elements of value. However, it highlighted several of the key ones and encouraged further research. Several of these deal with uncertainty, which is not well addressed in conventional CEA. These include: the value of knowing related to diagnostic uncertainty, insurance value related to both health and financial risk protection, real option value related to life extension bringing access to future innovation, and the value of hope related to interventions with an expected fraction of cured patients. The panel also emphasized important societal elements due to impacts on health equity and with regard to scientific externalities or spillovers. There has been some, but limited, progress on all of these elements since the STF's report, but perhaps most notably with respect to insurance value and health equity. The follow-on work of STF members Darius Lakdawalla and Chuck Phelps on “Generalized Risk-Adjusted CEA” (called “GRACE”) has moved this research forward through the development of a rigorous framework for assessing the impact of severity of disease and patient risk aversion on the evaluation of health gains. Professor Garrison highlighted this, and ended by also citing more recent work on tying these valuations to the share of social surplus allocated to manufacturers as an incentive for innovation.
Are Cost-Effectiveness Analyses Deviating from the Conventional? Insights from the CEA Registry
Patricia Synnott, Director, CEA Registry, Center for the Evaluation of Value and Risk in Health at Tufts Medical Center reviewed trends in real-world application of elements of GCEAs. The Cost-Effectiveness Analysis (CEA) Registry is a repository of more than 12,000 published cost-effectiveness analyses on a wide variety of health interventions. A review of the CEA Registry suggests that uptake of GCEA has been limited. Less than 5% of studies account for family spillover or productivity impacts, and only a small handful of studies have quantified equity impacts, adherence improving factors, or other novel value elements. Lifecycle pricing is also rarely considered in CEAs. Research conducted by Neumann et al (2022) using a random sample of 270 US-based CEAs found that only 5% of studies made assumptions about the impact of generic drugs, of which only 2% accounted for it in the base case. The limited adoption of GCEA may relate to uncertainty about how to operationalize certain concepts, data limitations, concerns about double counting, and a lack of consensus about how GCEA might inform pricing and reimbursement decisions.
Thoughts on Generalized Cost-Effectiveness Analysis: an ICER Perspective
Jon Campbell, SVP for Health Economics at the Institute for Clinical and Economic Review (ICER) provided his perspective on key considerations for GCEA. The presentation touched on three main points: (1) The ISPOR Task Force Value Flower is comprehensive, yet questions remain around if and how to best to fold in additional dimensions of value including surrounding the most appropriate cost-effectiveness thresholds for the purposes of estimating value-based prices; (2) How far are conventional CEA-informed prices to that of US net prices in the marketplace and what does that suggest about potential gaps in conventional analyses? and (3) What topics are ICER considering in their Value Assessment Framework update?
Published in 2018, the ISPOR Task Force brought forward concepts around how to characterize the value of health technologies that the field is continuing to discuss and debate today! That’s an impressive field-level contribution. As published in ICER’s Proposed Changes to its Value Assessment Framework prior to receipt of public comment, “After ongoing consideration of the potential to perform quantitative analyses of additional dimensions of value, such as those reviewed by the ISPOR Task Force, we believe that methodological issues related to double counting and the inability to measure related opportunity costs present a strong argument to keep these dimensions as qualitative considerations at this time. Although the incremental cost-effectiveness findings will not be modified, unmet need or severity of disease measures will accompany the findings and will support deliberations on the long-term value for money of treatments… Although academic research is emerging on methods that facilitate weighting cost-effectiveness findings based on broad concepts such as risk and equity, more research is needed to understand the implications and unintended consequences of modifying health gains quantitatively. The largest concern in weighting health gains is that there is limited research on the opportunity cost implications, including what additional elements of value may be “lost” in displaced services (or individuals), and whether the overall opportunity cost threshold should be adjusted accordingly. ICER will continue to monitor advances in methods as well as monitor changes made in the health technology assessment ecosystem prior to updating our approach to weighing the cost-effectiveness findings.”
In terms of how far conventional CEA-informed prices are to that of US net prices in the marketplace, the presentation emphasized work by Bloudek and colleagues published in Value in Health 2021. In their analysis of 102 drug and indication-specific conventional value-based prices that ICER estimated using the $150,000 per QALY threshold, the researchers found that the marketplace net prices would require a median price reduction of 36% to reach the value-based prices from ICER reports. The median reduction suggests that half of the drugs required higher relative price reductions while the other half required lower price differences when compared to the conventional value-based prices. To some, the observed median 36% price difference suggests that conventional value-based estimates are a reasonable starting point while others argue that we have much work to do.
Finally, the presentation highlighted a few teasers from ICER’s Proposed Changes to its VAF. The three proposals summarized at the ISPOR forum included: (1) Implementing new methods to ensure that cost-effectiveness analyses done according to a modified societal perspective have “non-zero” inputs for impacts on productivity for the patient and caregivers, even when direct data are lacking; (2) Including a dynamic price scenario analysis; and (3) Including evidence on severity and health equity for committee deliberation.
GCEA: an Industry Perspective
Chris Leibman, SVP, Value, Access, Public Policy and Government Affairs at Biogen described some additional considerations from an industry perspective. This includes the importance of avoiding standardized “one-size-fit-all” approaches to value assessment, and the need to comprehensively examine all dimensions of value relevant to each innovative therapy. Dr. Leibman discussed the need for an intentional and proactive approach by industry stakeholders, to both measure inputs needed to estimate all dimensions of value and seek to publish GCEA studies in peer-reviewed journals in parallel to development of clinical programs. And finally, Dr. Leibman stressed that more investment on valuation methodology and collecting data is required, and that this should be a joint priority for all stakeholders across the ecosystem (payers, industry). Collecting data on caregivers, societal preferences, spillovers etc. is an investment as it helps society make better healthcare decisions.
The full presentation recording of this session is available in the
ISPOR HEOR Learning Lab.