New drugs and medical technologies often deemed “cost-effective but unaffordable”
Value in Health, the official journal of ISPOR (the professional society for health economics and outcomes research), announced the publication of a series of articles centered on affordability in healthcare. The special themed section, introduced by an editorial entitled Affordability of New Technologies: The Next Frontier, appears in the March 2018 issue of Value in Health. The guest editors for this themed section are Adrian Towse, MA, MPhil, Office of Health Economics, London, England, United Kingdom and Josephine Mauskopf, PhD, RTI International, Research Triangle Park, NC, USA.
The themed section includes 3 articles and 2 commentaries that examine the issue of affordability from different perspectives:
- Affordability Challenges to Value-Based Pricing: Mass Diseases, Orphan Diseases, and Cures. Focusing on 3 specific contexts, Patricia Danzon, PhD, analyzes how value-based pricing can manage “affordability” challenges, defined as drugs that meet cost-effectiveness thresholds but are “unaffordable” within the short-run budget. Danzon argues that cost-effectiveness and budgets are linked but that over time the budget can adjust if people want it to.
- The ICER Value Framework: Integrating Cost-Effectiveness and Affordability in the Assessment of Health Care Value. Steven D. Pearson, MD, MSc recounts the experience of seeing Sovaldi identified as ‘low value’ by his advisory committee members because the budget impact was “so significant that it over-rode what was acknowledged to be excellent cost effectiveness.” He details the journey that the Institute for Clinical Economic Review took in moving to adjust the price of a new treatment to reflect budget impact over and above the assessment of cost-effectiveness.
- Resolving the “Cost-Effective but Unaffordable” Paradox: Estimating the Health Opportunity Costs of Nonmarginal Budget Impacts. James Lomas, MSc, PhD, et al, argue that affordability should and can be dealt with by adjusting the cost-effectiveness threshold. They describe a method that draws on a threshold estimation exercise that lowers the cost-effectiveness threshold so that it represents more accurately the opportunity costs of the new intervention.
- Paying for Cures: Perspectives on Solutions to the “Affordability Issue.” Sarah Schaffer, MSc and colleagues provide a commentary that reviews innovative payment solutions to address the affordability issue, drawing on discussions with payers in the United States and Europe on the feasibility of implementing any of these alternative solutions. They conclude that for the foreseeable future, affordability pressures will continue to be handled by aggressive price bargaining, high co-pays (in systems where this is possible), and restricting access to subgroups of patients.
- Affordability of Health Care: A Global Crisis. In his commentary, John Watkins, PharmD, MPH, BCPS introduces and addresses several implicit affordability assumptions that should receive further scrutiny. Watkins calls for finding ways to eliminate paying for low-value products and unnecessary medical care, limiting the cost increases of high-value products, improving the efficiency of care delivery systems, and helping the public to understand the true societal impact of inefficiency.
Considering the points and perspectives raised in this collection of papers, Towse and Mauskopf reach several conclusions: 1) affordability matters, 2) more research is needed to understand the dynamics of healthcare affordability, 3) payer reluctance to adopt value-for-money treatments with high budget impact is understandable but risks distorting resource allocation, and 4) overall efficiency in healthcare needs to be improved.
