Innovations that extend life can generate option value and cost of experiencing future technologies.
To understand how consideration of option value may affect the potential cost-effectiveness of a treatment through a case study of ipilimumab for previously untreated metastatic melanoma.
We estimated the cost-effectiveness of ipilimumab in 2 scenarios: a conventional scenario, for which we constructed the model using the standard methods that rely on efficacy data directly from the phase III trial of ipilimumab, and an option value scenario, where we incorporated future hypothetical improvements in mortality for metastatic melanoma owing to innovations. We developed 2 approaches to incorporate option value. In the first approach, we forecasted mortality trends based on historical trends from the Surveillance, Epidemiology, and End Results (SEER) Program registry. Alternatively, we identified drugs being studied in clinical trials at the time of ipilimumab’s approval on and estimated their likelihood and timing of approval, potential efficacy, and cost. We accounted for increases in overall cancer treatment cost and unrelated medical cost in the option value scenario.
In the option value scenario, using the SEER approach, the incremental quality-adjusted life-years (QALYs) gained and the incremental cost increased by 6.2% and 3.8%, respectively, whereas the incremental cost-effectiveness ratio (ICER) decreased by 2.3% compared with the conventional scenario. Using the approach, the incremental QALY gained and the incremental cost increased by 7.5% and 7.1%, respectively, whereas the ICER decreased by 0.40%.
We developed generalizable approaches to estimating option value in cost-effectiveness analysis.