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Does a Drug’s Cost-Effectiveness Improve Over Time?

March 04, 2020

ShafrinBy Jason Shafrin, PhD, Healthcare Economist

According to a paper by Stevens et al (2020), the answer is “yes.” One clear reason why it would change is if the drug’s price changes. Even if that is not the case, however, the drug may be more or less effective over time. For instance, physicians may improve their ability to manage side effects or target dosing to specific patients. The authors call this the impact of “learning by doing.” Using SEER-Medicare data, the authors:

“…estimated the time‐varying effects of treatments in colorectal and pancreatic cancer over their life cycle, including FOLFOX (leucovorin, 5‐fluorouracil, and oxaliplatin) and gemcitabine, on survival of patients. Mean prices over time by strength and dosage form were calculated using historical wholesale acquisition costs. We found consistent downward trends in the mortality hazard ratios, which suggest that effectiveness improves over time. In the case of first‐line FOLFOX for colorectal cancer, the implied incremental cost‐effectiveness ratio based on the observational data fell from $610,000 per life year gained in 2004 to $27,000 per life year gained in 2011. Cost‐effectiveness estimated at launch is unlikely to be representative of cost‐effectiveness over the drug’s lifetime. In the drugs studied, the impact of time‐varying clinical effectiveness dominated the impact of changing prices overtime.”

The authors find that clinical effectiveness improves over a drug’s life cycle. It is unclear whether this is a general trend across drugs or is specific to FOLFOX and gemcitabine. Additionally, one challenge is that the population of interest changes over time. For instance, tumor detection may have changed over time and the patient composition may be unobservably healthier in later years than in earlier. The authors address this using an inverse probability of treatment weighting for the average treatment on the treated.

Despite these limitations, the finding that cost-effectiveness may improve over time is certainly an important one for policymakers and payers to consider.

Commentary posted with permission from Dr Shafrin.

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