Getting the Math Right: The Growing Movement to Improve How Medicines Are Valued Will Take Center Stage at ISPOR 2024
Health Economists and Policy Experts to Highlight Rationale for and Implementation of Generalized Cost-Effectiveness Analysis
ATLANTA – Leading health economists will gather in Atlanta on May 5-8 for a meeting of the Professional Society for Health Economics and Outcomes Research (ISPOR), where a growing number of experts will make the case for updating the cost-effectiveness methodology conventionally used by health plans and foreign governments to determine whether a prescribed drug is worth its price. The shift reflects a growing consensus in health economics that the value calculations performed by health technology assessment entities in the United States and abroad should more accurately reflect the quantifiable real-world value of medicines to patients and society.
"For too long, health plans and foreign governments have relied on faulty, outdated, and biased math that undervalues the benefits of lifesaving medicines to society. Conventional cost-effectiveness analysis is often used to deny, delay, or discourage the use of appropriately prescribed treatments,” said Peter Rubin, Executive Director of No Patient Left Behind (NPLB). “What we’re seeing at ISPOR and across the field of health economics is a new movement to replace broken cost-effectiveness methodology with an improved approach that provides a more comprehensive understanding of the value of innovation to patients and society.”
Simplified cost-effectiveness analysis (CEA) is increasingly being inserted into the treatment-access decisions that impact American patients. Organizations like the Institute for Clinical and Economic Review (ICER) have sought to require the federal government to adopt outdated CEA methodology in its ongoing negotiations with pharmaceutical companies to set prices for the Medicare prescription drug program. Several states also are considering adopting conventional CEA through so-called Prescription Drug Affordability Boards.
As multiple presentations and panelists at the upcoming ISPOR conference will highlight, conventional CEA produces faulty calculations that bias public perception and influence coverage decisions, which in turn may determine patient access to life-saving medicines. Updating the methodology with new approaches that correct for these errors will be crucial to preserving patient access to medicines that actually are worth paying for. It will also preserve society’s incentives for the development of the next generation of innovative and valuable medicines.
In contrast to conventional CEA, experts presenting at ISPOR will discuss techniques for implementing an improved approach known as generalized cost-effectiveness analysis (GCEA), which quantifies a broader set of variables in determining value, such as dynamic price changes over time, the number of patients likely to benefit from a therapy in subsequent years, and disease severity. Critically, multiple panels and presentations will demonstrate how to incorporate GCEA into current cost-effectiveness calculations and discuss implications for healthcare decision-making.
“If we use the wrong math to mislead ourselves into thinking that today’s medicines aren’t worth paying for, then investors aren’t going to bother funding tomorrow’s," said Peter Kolchinsky, Founder of NPLB and Managing Partner of RA Capital, a Boston-based investment firm. “GCEA math shows that the market has been far more rational than many health economists have given it credit for all these years, negotiating prices that actually reflect a bargain for society when you consider that medicines go generic but hospitals don’t. Once it’s clear that a medicine is worth its price, hopefully it also becomes clear that the right way for us to pay for it is out of everyone’s premiums, not by cruelly burdening today’s patients with high out-of-pocket costs that some can’t afford. Where’s the moral hazard in covering chemo with a zero copay? No one fakes cancer to score free chemo. The ultimate conclusion of GCEA will likely be that we need insurance reform to lower out of pocket costs for patients.”
“Patients and their families deserve a fair and robust model that adequately values the medicines we rely upon, and that’s what GCEA does. For too long overly simplistic math has stood between patients and breakthrough medications so bureaucrats can score political points both abroad and more recently here in the United States. It’s hard to live with a terminal rare disease. It’s immeasurably more difficult to live with one when the academic class willfully overlooks the value of what better health means to us,” said Gunnar Esiason, a patient advocate living with cystic fibrosis.
One featured panelist will be Darius Lakdawalla, PhD, who co-authored a September 2023 paper that identified several significant flaws in value assessments conducted by ICER. Lakdawalla’s research showed that, after incorporating just two missing elements of value (outcome certainty and dynamic pricing, i.e. the fact that drugs go generic), at least nine out of twenty drugs previously evaluated by ICER for their fully approved indications were incorrectly classified as cost-ineffective. The study also demonstrated how three GCEA-focused updates to ICER’s analysis – such as accounting for the fact that drug prices go down significantly over time when generics become available – would better reflect the transformative and permanent benefits that society enjoys from new treatments.
At ISPOR 2024, attendees can learn more about GCEA and affordable innovation at the following events and panels:
Global Differential Pricing Workshop - Promising Approaches and Implementation Challenges
Estimating a Drug's Price after Loss of Exclusivity As a Function of the Cost of Goods Sold
Actually, Me Too Drugs Are Awesome: Multi-Stakeholder Perspectives on the Value of Me Too Drugs
The Impact of the Inflation Reduction Act on Early-Stage Biomedical Investment Decisions, an Illustrative Real-World Case Example
Meet the Speakers & GCEA Practitioners
Valuing Obesity Treatments - an Application of Generalized Cost-Effectiveness Analysis (GCEA)
How Elastic Is Biopharmaceutical Innovation with Respect to Expected Reward? What Is Missing from Existing Literature on Elasticity of Innovation?
Meet the Speakers and Organizing Committee of NPLB’s Quest for GCEA and Affordable Innovation
How Can GRACE and Other Novel Methods Estimate ISPOR Value Flower Components? A User Guide to Generalized Cost Effectiveness Analysis
How to Adjust Economic Models for Health Equity in the Conduct of Generalized Cost-Effectiveness Analysis
No Patient Left Behind (NPLB), a coalition of biotechnology innovators, investors, economists, and patient advocates working to lower out-of-pocket drug costs, champions GCEA to help policymakers and broader health care industry stakeholders more accurately assess the value of medicines. In addition to supporting peer-reviewed research, NPLB created this animation to help illustrate the importance of “getting the math right.”
During the ISPOR conference, NPLB will invite all participants to join a Quest for Generalized Cost-Effectiveness Analysis and Affordable Innovation. This initiative will encourage attendees to take a path through the conference program, exhibits, and social events that will expose them to GCEA math and the economics and policy framework of affordable innovation. This journey is particularly recommended for health economists who work in industry and those who work on projects for industry.
About No Patient Left Behind
No Patient Left Behind (NPLB) is a coalition of biotechnology innovators, investors, healthcare professionals, and patient advocates working to ensure that patients have access to the medicines they need today and in the future. Through rigorous, independent research and data analysis, NPLB promotes biotech affordability and innovation, advancing common-sense solutions that enable every patient to afford the drugs prescribed by their doctor at low or no out-of-pocket cost — while also preserving the incentives for investment that spur the development of new, life-saving treatments. In tandem with its research efforts, NPLB educates leaders and stakeholders across the biotech ecosystem about thoughtful and balanced policy solutions. Learn more about NPLB’s latest initiatives at www.nopatientleftbehind.org.